Oct 31 2019

The Benefits of Blockchain Technology Across Industries

Retailers are exploring blockchain to help them lower transaction costs, expand into new channels and empower customers.

As e-commerce traffic grows, and as more people begin shopping with cryptocurrency, retailers are seeking out ways to secure transactions and better enable the use of the new currencies. Some see blockchain as a solution to both of these challenges — and more. 

Blockchain technology, defined as a chain of online transactions saved as a shared ledger across numerous computers on a peer-to-peer network, has its origins in cryptocurrency. 

But the technology also has applications for online retail, supply chain management, money transfers, digital IDs and virtually limitless other areas.

For instance, UPS announced last spring that it was partnering with the e-commerce company Inxeption to develop a blockchain-supported platform to facilitate business-to-business sales. 

MORE FROM BIZTECH: Blockchain is making inroads across all segments of business.

Blockchain Can Bring Better Security, Lower Costs

Among the benefits that blockchain can bring to ecommerce: lower transaction costs. The cost of blockchain transactions, notes Inviqa, is lower than the transaction cost of traditional e-commerce.

Public blockchains charge a fee of about 1 cent for every transaction; private blockchains offer even lower transaction costs. This makes blockchain a preferable facilitator of payment for obvious reasons, and Inviqa notes that such low costs are also opening the door to rapid micropayments. 

Blockchain technology can also provide improved data security. The decentralized nature of blockchain (as opposed to data stored on a central server) means that it’s extremely difficult for outsiders to hack into the data and carry out unauthorized actions, according to Inviqa.

Infiltrating the network would require an “extremely difficult and expensive” effort, Inviqa notes, as each node on the network would fight back against any attack carried out on the blockchain. 

The only way to bypass this defense is via a “51 percent attack” — where an attacker simultaneously infiltrates a majority of the nodes, which are located all over the world. 

This same decentralization also leads to increased reliability of data, since it protects companies from data loss due to server failures or natural disasters. 

Retailers That Accept Cryptocurrency May Benefit

Enhanced supply chain management is another plus. Many large retailers have either adopted blockchain to reduce the cost and complexity of their supply chains or are testing blockchain for that purpose, reports Practical Ecommerce. Blockchain can help retailers reduce the paperwork and other tasks associated with international shipping. 

“For example, data from a bill of lading for cargo shipments can be manually placed on the blockchain at each stage of the supply chain or automatically entered, eliminating the lengthy and expensive administrative process of approvals and receipt guarantees,” Practical Ecommerce notes.

“This allows all participants to track the shipment through its journey, verify the product information (such as pallet weight) at each step, and know that the data is accurate and trustworthy.” 

Blockchain also allows retailers to expand into new channels and attract new shoppers, Practical Ecommerce reports. Many of these emerging marketplaces are quite small compared to traditional e-commerce channels. 

“However,” Practical Ecommerce writes, “the marketplaces provide an option for merchants that are targeting a cryptocurrency-savvy community or want to expand their retail channel and appreciate a decentralized model.”

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