Blockchain In eCommerce: Benefits And Limitations

Unless you’re living in a pre-digital world and avoiding technology like a plague, you must’ve heard about blockchain mostly associated with cryptocurrencies. Today however, Blockchain has found its way in almost every industry and is fueling digital transformation. eCommerce industry hasn’t been left untouched and integrating blockchain technology can completely change the way your store operates. Of the many, the most obvious example of blockchain in eCommerce is the acceptance of cryptocurrency payment, but the utilities can go just beyond that.

Blockchain at a Glance

Blockchain is not in its infancy, but it is less understood and slightly regulated. Paddling through the jargons and brainstorming on the exact definition of blockchain can be difficult. This difficulty arises because blockchain is less understood and slightly regulated. Still, here’s how we can define it in a simpler way;

Blockchain is a distributed database that stores information in a digital/electronic format and is popular for its role in the world of cryptocurrency business, like Bitcoin. Another pro fact of the technology is its ability to maintain secure and decentralized transactions. Blockchain creates an environment for trading and transactions. Both parties involved have full confidence in each other. No need for a third-party to act as a trustee.

Why Blockchain in eCommerce

Online shopping and digital payment gateways are common, but internet fraud is a growing threat, requiring tighter security measures. Blockchain technology is safer, efficient, and reliable. It is decentralized, which reduces the chance of frauds and enhances security. It speeds up transactions, making it an excellent choice for businesses.

Additionally, blockchain technology offers transparency with an unalterable ledger.
This feature makes it convenient for businesses to carry out transactions with near-zero setbacks or glitches.

Blockchain in eCommerce has transformed the way online transactions are managed and there’s more to expect in the near future. To unlock its full potential and to make a better use of this technology, get help from a leading eCommerce Development Company for your business.

Benefits of Blockchain in eCommerce

With blockchain in eCommerce, expect faster, securer and more cost-effective online transactions. For a clearer and better understanding, let’s explore the core functions and how blockchain for ecommerce helps with security, efficiency and transparency.

Security and Transparency

The blockchain records almost every transaction and makes it accessible to all parties involved, making transparency its most significant characteristic. This vouches for easy monitoring of all transactions whereas customers can trace details of all their purchases along with a database that outlines their transactional journey. This is one of the many reasons blockchain eCommerce marketplace encounters less or zero fraud with retailer/business owner’s ability to spot any inconsistency almost instantly.

Decentralization

A decentralized design is another advantage as opposed to the traditional payment methods such as banks, payment process gateways, credit card incorporations and such. It was time consuming and a costly procedure; not to mention prone to hackers attack! 

With blockchain in eCommerce, the need for third-parties has been eliminated and transactions are managed directly between buyers and sellers which eventually lessens the fraud risk. Faster transactions and cost-effectiveness due to removal of intermediary fees add to the gains.

Efficient, Effective and Swift

Traditional payment methods nowadays are unreliable, unsafe and complicated whereas validation of transactions may take several days and weeks. In a fast-moving and highly advanced digital world, this can be a major setback but not with blockchain technology as it revolutionizes the entire process with swift and effective transactions.

Whenever a transaction occurs via blockchain in eCommerce, it’s checked and rechecked at multiple nodes before linking up as a crypto block with the chain. The entire process may seem daunting and time taking but not when you’re partnered with eCommerce and blockchain development experts.

Reduced Fraud and Setbacks

Transactions made through blockchain provide transparency and openness to all parties involved, securing them against online scams, hacks, and failure. The strenuous verification process at multiple nodes makes it nearly inaccessible for hackers to comprehend and track the history.

Boost Trust and Confidence

Higher security and transparency of blockchain technology in eCommerce inspire confidence and build trust in online transactions. Customers can easily track their purchases which makes it easy to spot any inaccuracy or even least chances of fraudulent transactions. 

Integrating Blockchain with eCommerce Payments

Introducing the technology in online payments has a lot of benefits but the process itself can be a little bit complicated. Still, let’s have a look at all possibilities with integrating blockchain in eCommerce transactions like payment gateways, choosing the appropriate platform and a good insight of all technological aspects.

• Payment Gateways

The initial step of adopting blockchain technology with eCommerce is linking it with payment gateways which bridges processing parties and retailers. It has the security and encryption required to secure sensitive information whereas it’s also important to determine if the payment gateway facilitates blockchain-based transactions in a safe and smooth way.

• Selecting the Appropriate Blockchain Platform

Another important factor is picking the right blockchain platform to integrate with eCommerce payments. Not all blockchain platforms may perfectly fit your business since each platform has its own strengths and weaknesses. Consider the technology’s ability to scale up as your business grows, improved security and smooth integration as well as cost associated with the entire process. Technical proficiency required to keep up in setting up the platform and keeping it up-to-date is also important.

• Understanding Technical Aspects

Understanding all the technical aspects associated with blockchain technology in eCommerce is all the more important. This includes basic design, encryption protocols, security of data and payment. With this, your knowledge on the various blockchain platforms that may include hardware and software plus technical proficiency are other factors worth considering.

Challenges and Limitations

No doubt, blockchain technology in eCommerce has revolutionized the online payment market, there are several limitations and obstacles that need to be overcome before fully benefiting from the tech.

Scalability and Adoption

The scalability of the blockchain industry is a significant challenge, as the network can only manage a limited amount of transactions. This results in slower processing time and higher costs.

Compliance and Regulation

Yet another challenge that blockchain in eCommerce faces with transactions is regulation and compliance as the framework is always upgrading and developing. Companies take time in catering to the diverse requirements and limitations that may vary from a country to another.

Integration with Legacy System

Integrating the technology with a traditional system and replacing the old-school methods is perhaps the most daunting of all, if not impossible. To work at its optimal level, blockchain technology requires a more upgraded support system. On the contrary, many business owners have their trust with the legacy methods and technology which makes it more challenging.

Blockchain and Traditional Payment Methods: A Comparative Analysis and Future Stance

There’s an unmissable and stunning contrast between blockchain and traditional payment methods in the world of eCommerce. 

Blockchain technology enables transparent transactions. The transactions take place directly between buyers and sellers. There is no need for third-party payment processors like credit/debit card companies or banks. This is because the blockchain tech is based on a decentralized network. The eCommerce market is growing rapidly. Blockchain technology plays an essential role in this market. It is likely that blockchain will replace the traditional system soon.

Prediction and Trends

Tech and industry experts agree on the fact that blockchain in eCommerce will become even more crucial in the coming time and is sure to lead the digital trend. Some of the most significant predictions and development are:

• People expect decentralized financial applications (DeFi) using blockchain to become a major means of payment.
• The increasing popularity of DeFi is driving the rise of different blockchain platforms. Blockchain platforms can cater to diverse industry needs. These platforms have the potential to satisfy both customers and businesses.

Use Cases

There are numerous possibilities of blockchain technology in eCommerce payment system including:

• Blockchain technology makes for securer and more encrypted online payments which reduces the chances of fraudulent activities and setbacks.
• Lesser transactional cost and time make cross-border payment easy, which adds to the many pros.
• Microtransactions are also supported by blockchain in eCommerce which might not be an option with a third-party processor such as banks. In-app purchases are also possible.

Blockchain offers undeniable benefits to customers and businesses. Technology can cope with rising digital trends in eCommerce. There are many supporting facts to show the advantages of blockchain. The details above focus on how blockchain will change eCommerce and the unlimited possibilities it offers to the industry.