Blockchain has repeatedly been branded “the most disruptive technology” in recent years, and with good reason. The technology brought to the table a level of security and accuracy previously thought impossible and ushered in a “shift from centralised server-based internet systems to a cryptographic transparent network.” Hate it or love it, it has forever changed the way online transactions worked by:
- Fostering trust and transparency through its open, distributed ledger system;
- Replacing third-party intermediaries, dramatically driving down costs and delays in online transactions;
- Creating a secure and transparent means of transactions that is ripe for automation for greater operational efficiency.
Blockchain is here to stay. And e-commerce will never be the same because of it.
Alongside the worldwide popularity of cryptocurrencies, blockchain adoption and integration among companies is at an all-time high. A recent report from IDC forecasts that spending on blockchain solutions will reach $2.1 bn this year – double the $954 mn spent last year. By 2021, they predict that spending would reach a staggering $9.7 bn, representing a year-on-year growth rate of 81.2%. This rapid level of growth is coterminous with the growth of e-commerce itself. Industry sales reached over $2.8 tn this year, from only $1.3 tn in 2014, a good percentage of which occurred via online transactions. This means blockchain-based solutions are poised to take advantage of the burgeoning profitability margins of the industry as it becomes more and more mainstream.
Payment processor services like Paypal have begun to feel the risk as the market share for blockchain-based services continue to grow. But they are not the only industries primed for the disruption that blockchain is about to bring. E-commerce itself is bound to change as blockchain technology continues to revolutionise aspects of the industry. The removal of intermediaries in payment processing, for example, has fostered the emergence of decentralised marketplaces which pass savings onto consumers time and again mainly through the significantly lowered operational expenses of vendors.
Payment processing companies are not the only middlemen to feel the impact of this disruption. In the current system, money bounces off of many companies to get the money from the customer to the vendor. As cryptocurrency continues to gain currency – pun intended – we can expect a lot of the intermediaries in fiat-based transactions online to disappear in the long run, as companies try to compete with cryptocurrency and drop as many middlemen as possible. Some even foresee the eventual removal of the 2.9% credit card tax applied to most transactions today.
The continued growth of blockchain adoption and integration presents many opportunities for the e-commerce industry. It might even hold the solution to long-standing problems inherent in existing platforms and optimize operations to such a greater degree to drive down the costs of goods further, which threatens traditional stores in terms of pricing. While this is all yet to be, one thing is certain now: it is now imperative for businesses to embrace blockchain as part of their infrastructure if they are to survive.
It bears repeating: Blockchain is here to stay. And e-commerce will never be the same because of it.