Blockchain is inherently connected to cryptocurrency. And for good reason. The entire technology was developed so that Bitcoin and other cryptocurrencies could be used for financial transactions.

But the potential for the technology itself has now gone far beyond simply financial cryptocurrency transactions. Its use in in healthcare, education, and many other sectors is now being explored, and there is great promise.

What Exactly is Blockchain?

Simply put, blockchain technology is a method by which transactions of any nature can be permanently recorded in “blocks,” time stamped, and connected to a block that was created just before it and to the next block that will come after it. The beauty of blockchain is that every transaction or record that has been placed in a block is there permanently. It cannot be altered and is, therefore, a true and accurate record of exactly what occurred. There is a security feature in blockchain that does not exist in other transactional records, which can be hacked and altered by both those with access permission and those who get in through cyber-hacking.

So what’s in it for business, you ask? Well, the short answer is a lot. Here are just the beginnings of what blockchain technology can do for you.

Start Accepting Cryptocurrency for Purchases

Because blockchain was originally developed for cryptocurrencies, like Bitcoin, it has become a growing factor in financial transactions, especially those that are global. When a Chinese retailer can sell its products to consumer all over the world, it can accept bitcoin rather than the native currency. This eliminates the need for currency exchanges that can be both cumbersome and costlier (on average 1% transaction fee vs. up to 3%).

And a cryptocurrency can be immediately converted to a native currency, based upon the market value of the coin. And the transaction itself is permanently recorded, should there ever be a question about payments. The use of cryptocurrency for purchases promises to be an ever-increasing phenomenon.

Create Unbreachable Contracts

The terms of contracts can be entered into blockchain technology – these “smart” contracts are thus indelibly recorded, so that both parties understand how orders are to be fulfilled, when fulfillment will occur, and the “what” and “when” of payment. When these contracts become part of a blockchain technology, there is no question of their terms and the responsibility of each party. And here’s the great part: once in a block, terms cannot be altered unless both parties enter any revisions in agreement, and those revisions are entered into another block, and time-stamped as well.

A word of caution though: According to specialists from N-IX, blockchain development is probably not a good idea when many changes or revision are anticipated. This can be both cumbersome and costly. Merchants should determine which contracts belong in a blockchain environment and which do not.

Improve Logistics and Shipping

Any merchant who must ship, whether in a B2C or a B2B environment, faces a complex set of tasks related to the supply chain and the communication across many levels, especially if shipping occurs internationally. There is the land transportation to a port, working with freight forwarders and custom brokers, not to mention governments, port authorities and commercial ocean or flight carriers. Even when only domestic shipping is involved, there are multiple points of logistics in getting the item from the warehouse to the customer.

Blockchain technology can permanently record all steps in the shipping and delivery process, providing an unalterable tracking and delivery record for all stakeholders to see. Many e-commerce businesses are also finding benefit in its use to control inventory. Here’s the value in summarized form:

  • All participants in the process, from the consumer to the warehouse employee, to the shipper have transparent and shared access to the block in which the transaction has been placed.
  • As shipping and delivery processes occur, they can be entered into the blockchain for all to see.
  • No one person in the process can alter the information that has been entered into the blockchain. This eliminates fraudulent changes – supply chain of events and tracking are all entered and verified by all stakeholders. In short, there is full transparency fof all involved, even the customer at the end point.

How to Get Started with Blockchain

Blockchain technology is new, and many business owners do not yet understand the potential for its use. That’s okay for now. But, as the e-commerce sector move forward, this technology will play a larger and larger role. Those businesses that get on board will have an advantage over those that do not. Consumers will come to expect that their transactions with companies will be secure, transparent, and not subject to alteration by a company. If those transactions are immutably recorded in a blockchain environment, the consumer has a greater sense of security.

Consider just the example of a consumer who may order food products from an e-commerce retailer. If there a blockchain record of where the food originated, where and how it was processed, and how it was transported, that consumer has a higher level of trust. The same can be applied to most any product.

So, how do you get on board? You have two options:

  • The technology itself is understood by many development enterprises. You can contract with an individual or firm to develop a blockchain technology for your business. This can be costly, of course.
  • There are a number of new enterprises that have developed generic blockchain technologies which they now market to businesses, almost as SaaS-type service. Piggy-backing on that already-established technology is a more budget-friendly solution.

The Big Three

No one has forgotten the security breach that impacted Target. To date, it has paid out about $18.5 million for that breach. And Equifax is still dealing with the impact of its security breach. Consumers are losing trust in enterprises to protect their personal and financial information. And this lack of trust does have an impact on consumer online purchases. While they may trust Amazon and PayPal, do they trust our smaller business? You can ensure they do through the use of blockchain – for three reasons:

  1. Blockchain can protect your customers’ information, through its encryption and controlled access to blocks.
  2. Security. There is no point of entry for malicious code to be inserted.
  3. Access. Businesses can control who has access to each block, and this increases both security and transparency of transactions. All stakeholders have access, but no one else.

Blockchain is not widely in use yet. But it is in the future of e-commerce for sure. Making the move to incorporate it now will set you ahead of the others and generate much greater trust on the part of your customers.