From transaction records to payment system, the global e-commerce sector which is projected to increase to $4.058 tln by 2020 needs the Blockchain to evolve with the growing trend, particularly in the Ethereum market. Statista notes that the number of people buying goods or services online will increase from 1.46 bln in 2015 to above two bln in 2020.
Aside contributing to breaking the monopolistic tendencies of top corporations such as Google which commands 77 percent of US search-ad revenue and Amazon that handles over 40 percent of US e-commerce, the decentralized technology could help improve trust and reputation which has been centrally-governed by big marketplaces.
Blockchain and e-commerce
The application of the Blockchain may make it unnecessary for merchants in the e-commerce industry that are not a part of the centralized marketplaces to put in huge efforts and advertising budgets usually needed to create trust. This is due to the fact that the technology works on a distributed ledger model which records every transaction maintaining the authenticity of information on a secure global network which is tamper proof.
In the payment sector too, PayPal, for example, has retained its competitive edge. However, despite its wide reach and acceptability, the platform chose to leave out some countries including one of Africa’s top economies, Nigeria, wherein users in the country have been deprived of using the services for many years.
Later, it only allowed outward payments but barred users from receiving payments with the service. At some point, this has created a need for the people to seek a convenient option for sending and receiving payments online.
PayPal’s centralized nature was also cited in the case of its operation’s shut down in Turkey last year. The operation was reportedly shut down on the grounds that the American company had failed to comply with stipulated laws.
Afterwards, it was suggested that people in Turkey started yielding to a free control market with the uptake in Bitcoin use after the non-approval of PayPal’s license by the Banking Regulation and Supervision Agency.
Expensive and long payment process
According to Monetha’s Co-Founder, Justas Pikelis, who argues that most of the noted situations are not likely to happen with the application of the Blockchain technology, the e-commerce industry is also faced with another major problem of expensive and long payment process.
His company says the payment process entails about 16 different steps to settle a transaction and up to 15 separate fees to pay for payment gateways, thus making transaction fees range from two percent plus 0.1 to six percent plus 0.7, a long route that could be cut short with Blockchain use.
Pikelis states via email:
“E-commerce needs the Blockchain technology to keep up with the future. Blockchain is the perfect tool for e-commerce to be more efficient and more trustful. For example, payment processing through Blockchain has a significantly bigger potential for transaction high speeds and low prices, let alone all the possible variety of ways smart contracts can improve both e-commerce and payments. In Monetha's case, the Decentralised Trust and Reputation System is the best proof for that. The powerful benefits that DTRS brings would be impossible without the Blockchain technology.”
In a review of the year 2015, Ali Financial cloud, a service of one of the top e-commerce giants, Alibaba, touched on the possible benefits of using the Blockchain. It was later reported that the company valued at $256 bln and its $60 bln financial arm Alipay are recruiting Blockchain experts to actively look into the potential of Blockchain technology.
Growing Ethereum economy
Another issue of interest in the Blockchain for e-commerce narrative is the inability to reach the growing Ethereum economy yet.
Despite the growth of Ethereum, its digital asset, Ether, is not as used by merchants as a means of payments even though it now has a market cap of $21 bln and several new tokens of products have been built on its platform.
With the 10 percent of global GDP expected to be generated on Blockchains by 2025, the new economy to be created by the Blockchain that is taking shape now would seem attractive to merchants for participation.