14 April, 2017

Trust and the Basics of Blockchain in eCommerce

One of the biggest problems we face in the eCommerce space in South Africa is trust – people are reluctant to put their credit cards through the internet for various reasons but 7 February 2017 marked a very big milestone in terms of adopting a new technology called Blockchain with a few major South African banks deciding to make the move towards Blockchain.

In this article, we will discuss trust and the basics of Blockchain in eCommerce.

In 2009, after the last financial crash, someone, or a group of people by the name of Satoshi Nakamoto released a white paper suggesting a new digital currency called Bitcoin. Its purpose was to help circumvent the problems we saw in the financial crash of 2008 by letting people have more control over their money. To be clear, Blockchain is not Bitcoin, it is the technology behind Bitcoin that enables the movement of any digital asset on a trusted network.

As the adoption grows and Bitcoin proves it’s strength as a currency that can be used to trade with, we have seen it trickle into the eCommerce space where online stores have started accepting Bitcoin.

The idea is simple and the more we learn about it, the more we realise just how genius the Blockchain is and how big it will ultimately become. Its application is widespread…

  • Money transfer is the first and most important. Banks around the world will adopt the technology because Blockchain speeds up the process of transactions. And if they do not adopt it, they will be left behind because of the very disruptive nature of Blockchain.
  • Corruption: Every transaction on the Blockchain is transparent, but encrypted and immutable making it easier to trace its sources. Here’s an example:
    Currently, all payments to a supplier have to go through a tax organisation which inevitably is seen by a third party such as SARS. The third party is, therefore, able to share this information with other competing businesses and undercuts the business who did all the homework to secure the supplier. Using a cryptocurrency like Bitcoin, you can pay suppliers directly and the third party does not see these transactions.
  • Digital ID’s: Numerous organisations have started using Blockchain to give people Digital ID’s so that they can choose what information to share about themselves. This could apply to companies as well. If companies are validated through the Blockchain, trust can be built over time.
  • Supply chain: More and more people are asking for organic foods. Since every transaction can be traced back to its source, we will have a far greater level of trust when a company claims their food is organic when we can trace the money back to the source. Not only that, the process to date has been cumbersome and expensive and Blockchain is able to help cut costs and improve these processes.

These are just some the applications of Blockchain.

In time, as more devices are connected to the internet, we will see an explosion of Blockchain applications truly opening up The Internet Of Value(s). Imagine a fridge door connected to the internet that rewards you for closing it sooner than you normally do. Imagine going to the gym and the energy you exert is converted back into a value of your choosing – be that money or electricity on your meter. Imagine being paid micro amounts for content you create because the content is of such great value to the reader. Imagine paying movies you otherwise would not get in your country directly to the studios. Imagine putting your music onto the Blockchain and being paid directly by the public for your work.

And we’re only scraping the surface. The possibilities are only limited by our creativity to think of new applications.

It will not be long until we see the use of cryptocurrencies becoming mainstream in South Africa. Already one can plot your business on places like coinmap.org to tell people where Bitcoin is being accepted.

In summary.

The announcement by South African banks that they are all-in on Blockchain is an acknowledgement that Blockchain is here to stay and that we will now see widespread adoption across all business in the very near future.

Contact us to find out how we can connect your eCommerce store to a Bitcoin wallet and how to extract the money back into your own currency.