Blockchain technology is new to the ecommerce industry and is not being widely used. However, its list of benefits has intrigued many ecommerce sellers who have started taking an interest in it. Ecommerce brands wish to understand its usage and applicability for the ecommerce industry to take their businesses to the next level; let’s unravel them together.
What is blockchain technology?
Blockchain is a data-sharing technology
which highly secure and reliable. The data added to a blockchain is associated
with a unique digital signature and cannot be altered easily, making it highly
secure.
Blockchain records transaction data in
the form of blocks. Each block contains three elements- a cryptographic hash of
the previous transaction, a timestamp and transaction data. Each block is
securely linked to the previous block using cryptography, forming a chain.
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What are the benefits of blockchain technology?
The benefits of blockchain technology are as follows:
1. Transparency
Blockchain is a distributed ledger,
peer-to-peer technology meaning that all stakeholders have access to the data
ensuring transparency. Each stakeholder can make additions to the data without
requiring permission to maintain openness.
2. 2. Security
Blockchain technology could be the most
secure data-sharing technology in the world. In a blockchain, each data block
is connected to the last and associated with a digital signature; thus, making
changes in the data is difficult. Moreover, any change made in one data block
automatically makes changes in the ones connected to it, preventing fraud.
3. 3. Permanent
Information stored in blockchain
technology is kept in a decentralised manner across various local nodes. Thus,
numerous duplicate copies of the data are stored, reducing the chances of data
being lost to almost zero.
4. 4. Traceable
In an increasingly digital world,
finding the source of information can be challenging, but blockchain technology
solves this problem. You can trace and find products across the supply chain
using blockchain technology.
5.
5. Efficiency and speed
By using blockchain technology, you can
automatically create a digital record of every transaction. Blockchain negates
the chances of human errors through its digitised system, ensuring speed and
efficiency in the fulfilment process.
What are the limitations of blockchain technology?
Despite its impressive benefits, blockchain technology comes has its fair share of limitations; let’s have a look:
1. Scalability
Blockchain technology can only hold a
limited amount of data in a single block thus, it cannot be scaled as the block
size for storing information is fixed.
2. 2. Storage
Since duplicate copies of information
are stored across various nodes, it increases the amount of storage space
required. It can be challenging for ecommerce brands to store such vast amounts
of data on personal computers.
3. 3. Privacy
The data in a blockchain is encrypted
but is available to all stakeholders who have access to it. This creates some
privacy issues related to customers’ data.
4. 4. New technology
Blockchain technology is still in its
infancy stage within the ecommerce industry. Most ecommerce brands are
intrigued by it, still others are confused about its applicability. Thus, you
could thoroughly understand the meaning and usage of blockchain before making
it a part of your technological ecosystem.
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