New technologies are having an increasing impact on various industries. A prime example of this is the growing popularity of blockchain technology in commerce, which, like many other sectors, is seeking modern and sustainable solutions.
Fighting counterfeit products, tracking goods, and providing access to information about the production process are just some of the advantages of using blockchain technology. In our article, we will try to answer questions such as: what is blockchain, how to use blockchain in e-commerce, and how this technology can bring about an e-commerce revolution.
The Potential of Blockchain
ъThe most recognizable examples of the use of blockchain technology are Bitcoin and other cryptocurrencies, but blockchain is much more than just the crypto industry. It is an extremely interesting technology recognized in many industries, from legal services to healthcare, trade, and even government administration. If one closely follows the development of this technology in the world, it can be assumed that in the future, blockchain will have an increasingly significant impact on the global economy.
Blockchain technology allows for innovative and transparent business practices. By using it, producers can meet the needs of modern, informed, and demanding consumers. The potential of this technology is well-known to sales giants such as Louis Vuitton or H&M, who were among the first to implement it in their operations.
Types of Blockchain
There are two types of blockchains: open, accessible to anyone from their personal computer and not controllable, and closed, dependent on an administrator. If you plan to use this technology, you first need to consider its purpose in your specific case, and then choose the version of the blockchain with functionality that best suits your needs. For example, if the technology will be used as a waybill, you need to find a blockchain that allows you to upload data that will be included in the waybill. Alibaba, a shipping company, uses blockchain in a similar way.
Blockchains can also be created from scratch, and that is how they began to emerge. However, today fewer and fewer organizations are spending resources on creating their own technologies, preferring to use public ones that are becoming more and more common.
Applications of Blockchain
There are many areas of activity where blockchain can be successfully used: banking, healthcare, transportation, and real estate. Blockchain can even be used for conducting elections.
Manufacturing is considered a highly unsustainable and often unethical form of activity. Environmental awareness in society is constantly growing worldwide. People are increasingly interested in taking care of the environment while having quality products. All of this makes the 21st-century consumer more demanding.
Blockchain technology can be extremely effective in detecting counterfeit products. Luxury goods manufacturers, such as fashion designers, are often the ones who suffer the most from this problem. Consumers also are not always certain of the authenticity of the product. Authenticating a product using blockchain technology protects both the brand and the buyer. This solution has been used by LVMH (the French luxury goods conglomerate Louis Vuitton), Microsoft, and Consensys to create the Aurora platform that helps the luxury industry monitor and track goods.
The LVMH group uses blockchain technology in almost 60 of its brands and plans to expand blockchain functionality by protecting intellectual property and preventing advertising fraud. Many other luxury brands have followed their lead by providing proof of authenticity for their products, which allows them to be quickly identified. This way, the sales industry can promote and verify ethical production while proving its sustainability.
Blockchain authentication is also used in the precious stone industry, with the introduction of the Tracr platform designed for the diamond industry. By using blockchain, the platform allows for the identification of the authenticity of natural diamonds, assigning them individual numbers. A registered diamond with such a digital number can be identified by verifying its origin and associated transactions.
Cryptocurrency in e-commerce
Cryptocurrency in e-commerce raises many questions that are crucial to the reliability of economic transactions involving such assets, particularly regarding their legal nature and related tax issues. Nevertheless, they are very convenient for buyers and online store owners, with cryptocurrency payments in online stores becoming a common phenomenon.
Blockchain can also be used by online platforms using utility tokens. Then, payment tokens can be used as loyalty points, replacing traditional loyalty points stored in the blockchain. Thus, the fear of losing a loyalty card disappears. Instead of using e-commerce solutions, an online store can implement blockchain technology and use tokens to tokenize its business. Similarly, blockchain can be used as a payment system on an internet platform. Instead of paying with traditional currency, payment is made with tokens.
Future of blockchain
The blockchain technology has been around for over a decade, yet in many countries it is still a novelty and its use is not sufficiently regulated by legislation. Given the functionality of blockchain and its numerous applications in various industries, including trade, it is expected that in the near future there will be development of the technology and related regulatory acts.
Blockchain poses a challenge for both legislators and practitioners, requiring new legal solutions, new skills from lawyers, and collaboration between legal and IT communities in creating and implementing laws. On the market, effective integration of blockchain will undoubtedly be an easier task for large conglomerates that have the resources to invest in new technologies. Smaller brands will find it much more difficult to take advantage of the technology's benefits.