In 2008, Satoshi Nakamoto invented blockchain to serve as the public transaction ledger of the cryptocurrency bitcoin. The creation of the blockchain for bitcoin made it the first digital currency, to resolve the double-spending problem without the need for a trusted authority or central server.
So, what is blockchain? a blockchain is an endless growing list of records called blocks, which is linked and secured using cryptography.
Each block naturally contains a cryptographic hash of the former block, a timestamp and transaction data.
As a design, blockchains are resistant to modification of the data and is an open distributed ledger which can record transactions between two parties proficiently, and in a verifiable and lasting way.
Blockchain permits digital information to be communicated between a decentralised, peer-to-peer (P2P) network creating a new type of internet.
Blockchain functions like a digital ledger or spreadsheet which can be accessed by everyone, but the former input cannot be edited without that edit appearing in the audit trail.
Having a high-level understanding of how blockchain works, will help you stay ahead of the competition.
There are a number of key features which make the network exciting for eCommerce brands like:
- Decentralised – Blockchain works over a P2P network. Data is not held in a single location, which makes it more reliable. Nobody owns or is in charge of the blockchain, which means its free of influence from governments or large corporations.
- Immutable – transactions are append-only, meaning once data is recorded it cannot be changed without that change is visible in the audit trail.
- Near real-time – stakeholders can work collaboratively in real-time over a sole, trusted ledger.
The challenges that the eCommerce industry face today are trust, frauds, slow transactions and other costs. Going forward blockchain will disturb the challenges and create a whole new revolution in the eCommerce industry in the following ways:
- Cheaper Transactions – blockchain allows the existence of “smart contracts” which would be software programs that will self-execute contract instructions, lowering the cost and complexity of transfers and transactions.
- Faster transactions – transactions, order details, commissions in the form of smart contracts can be used to save all documents, shipping, delivery and possible events which affect financial settlements. Thus, every individual or company involved in the supply chain can make vital data visible to others, which lowers disputes, delays, disorganisation and speeds up the transaction process.
- Transparency – blockchains store entire owner history, no matter where the product goes and how many times its bought, which eliminates the frauds and brings transparency to consumer and merchant.
In conclusion, blockchain has ushered a new revolution of digital currency and transaction system where intermediaries like brokers, banker’s lawyers might not be needed at all.