It shouldn’t come as a surprise that the e-commerce sector will soon be shaken up by blockchain. The e-commerce marketplace witnesses millions of transactions per day and blockchain technology is being applied by a number of organizations to revolutionize the current financial system.
Blockchain is a distributed ledger technology built to power cryptocurrencies, like Bitcoin and Ethereum. This technology is transforming the financial services sector, making transactions more secure, transparent and much faster (no middlemen are involved with blockchain). Now, the e-commerce marketplace is starting to look towards blockchain to introduce new, secure payment methods, smart contracts and even ways to verify digital identity.
Major e-commerce providers have already started to implement blockchain technology. For example, the China-based e-commerce giant, Alibaba, recently announced the use of blockchain tech to cut back on the risk of counterfeit products. Russia’s largest online retailer, Ulmart, also intends to protect consumers against fake merchandise with a blockchain-based platform.
What About The Little Guys?
And while blockchain is already being adopted by major e-commerce players, the benefits this technology can bring to smaller, peer-to-peer marketplaces can be even more extensive. This concept is being proven by 5miles, the leading peer-to-peer marketplace in the U.S. The company has just announced the formation of their 5xlab, which is a blockchain lab that will offer technology development services for building a new digital network infrastructure.
The goal behind this blockchain-based network is to make it easier then ever before for consumers and businesses to transact beyond the traditional internet and industry giants that have come to dominate today’s e-commerce sector. The 5xlab will provide technology for underlying smart business contracts, support cryptocurrencies to facilitate the execution of smart business contracts and implement smart business contracts in 5miles’ 12 existing marketplace categories. Ultimately, this blockchain network will provide a better, smarter way of digital transactions and marketplace shopping.
“5miles, as a marketplace, connects people and facilitates transactions, on a safe, convenient, trustworthy platform,” Dr. Lucas Lu, 5miles’ C.E.O. and founder said. “The 5xlab is, in its own way, a natural but innovative extension of what we already have built.”
Specifically speaking, here are three ways in which 5miles demonstrates how their blockchain-based infrastructure will transform e-commerce for peer-to-peer marketplaces:
Smart Business Contracts
The use of smart contracts is one of the primary benefits of using a blockchain network for online transactions. Smart contracts can automate the fulfillment of agreements over the blockchain, eliminating middlemen and making transactions much more secure. These contracts also offer the possibility of making larger purchases (i.e. real estate or automobiles) over a blockchain network.
5miles has taken the concept of smart contracts a step further though. The company has created a new blockchain protocol referred to as “smart business contracts.” Smart business contracts could be set up for product makers and producers to create certificates of authenticity for the products they make. This certificate can then be transparently tracked as the product moves in the supply chain from sellers to buyers. There are other safety features on the 5miles’ blockchain protocol that provide a deposit challenge and verification mechanism for buyers.
“Early blockchain technology has yet to eliminate significant barriers for business,” Michael Yuan, 5xlab’s Chief Scientist, said. “Our aim is to replace the smart contract technology at the core of Ethereum with a more business-friendly smart business contract.”
Even More Transparent Transactions
Fraud has become a major problem in the e-commerce sector. Counterfeit goods and questionable items are always an issue when making peer-to-peer purchases online. Using a blockchain network can help eliminate fraudulent goods by ensuring transparency.
Blockchain technology enables organizations to create a permanent record of every step of the lifecycle of a product, from development to manufacturing and ultimately to sale. This can increase efficiency, reduce inevitable human error and make the entire supply chain more resistant to fraudulent activity, since the blockchain ledger is highly transparent.
Yet in addition to protecting against counterfeit goods, 5miles’ smart business contracts would also help protect against sales of illegal substances commonly associated with the dark web, since the authenticity of products can be tracked within the supply chain from sellers to buyers.
“On what we call the ‘CyberMiles’ blockchain, all members of the network are incentivized by crypto tokens to maintain the health of the network,” Yuan said. “For example, members can be awarded for identifying and voting down illegal products on the network creating a truly decentralized, self-governing ecosystem.”
Rewards for Small Businesses
A less obvious feature of a blockchain-based network are the benefits small businesses can gain. Operating on a blockchain infrastructure creates a “decentralized economy” based on trust. As a result, no central company can shutdown a buyer or seller operating on the blockchain.
“Blockchains can help us build decentralized marketplaces where small businesses compete on merits,” Yuan said. “It is a world view that is in stark contrast against today’s business landscape dominated by big centralized corporations. For example, on a blockchain based peer-to-peer marketplace, no central company can censor or shutdown a buyer or seller.”
Another benefit for small businesses operating on the blockchain is the use of cryptocurrencies. Buyers and sellers that use digital currencies eliminate middlemen and transaction fees.
Blockchain Revolutionizing E-Commerce
Although this concept is still new, blockchain is poised to disrupt the e-commerce sector. Major e-commerce players have already started to implement this technology and now smaller marketplaces, such as 5miles, are jumping on board the blockchain bandwagon.
A blockchain-based network will help ensure faster, safer and more transparent transactions for consumers everywhere. Thanks to blockchain, the future certainly looks bright for peer-to-peer marketplaces.