More people have heard about Bitcoin than the underlying force that drives it, but that piece of technology is already transforming what they consume and how they shop online. Blockchain is essentially a distributed digital record of a transaction that is verified and cannot be changed by one party. The way this information is created, stored, exchanged and tracked makes it ideal for e-commerce.
Transactions are immutable
Once every party involved in a transaction agrees on the terms, the information is verified and stored in a digital block as part of a public or private ledger stored on several computers. Each block includes information of the blocks that precede and follow it, making it impossible to change stored information. With these smart contracts, agreements cannot be changed and exchange occurs when the conditions stipulated in the deal are met. This eliminates misunderstandings and disputes.
The blockchain by its nature is decentralized and transparent and designed to move forward by rigorous verification. Furthermore, the information is not stored on a single computer which can easily be manipulated by one party trying to undermine another. Every party is a guarantor of the system which ensures an open, decentralized and secure environment for buyers and sellers. Information like who owns the intellectual property, what percentage of business partners own, fees, dividends, voting rights and decision making can all be written into blockchain contracts. Before any information is added to the chain, the users have to reach a consensus.
Blockchain is cheap
Credit card payments currently need several middlemen to verify and secure payments, all of whom take a cut and drive up fees. By reducing the number of steps needed to complete a transaction, blockchain speeds up the payment process and reduces the cost for all parties involved. Blockchain payments can move cost-free between two parties, or one trusted facilitator who ensures that goods are delivered before payment is made. Buyers and sellers, therefore, save money and time.
Blockchain transactions provide added security without revealing too much information about its users. This is not the case with credit cards and current methods of transaction where users are always worried about how much information they give away. Multiple servers and their immutable nature provide multiple layers of security. Cryptography makes even the slightest changes in the blockchain visible, alerting users if there’s an attempt to disrupt a single block.
Tracking and logistics
The process of generating and sharing information on blockchain updates all parties involved, which makes it easy to track goods from where they are shipped to their destination. Every step of the process can be time-stamped and shared, with every party informed along every step of the way. This has great benefits for supply chain management, transfer of funds and verification of business transactions.
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