The concept of blockchain technology was budded in 1991 when Stuart Haber and W. Scott Stornetta had come with the idea of a cryptographically secured network for blocks. The blockchain as we know today was built by an unknown person called Satoshi Nakamoto in 2008. The main purpose behind the creation of the blockchain is for serving Bitcoin transactions. It is not only used to serve Bitcoin transactions now but also used to serve anything of value. It is already making its ways into various industries and e-commerce is one of them. E-commerce giants like Amazon, eBay, and Alibaba have already embraced the blockchain. Many online e-commerce platforms are embracing the blockchain in order to solve the underlying issues related to security, transactions speed, etc.
- The blockchain is a chain of blocks. Each block is linked to two blocks forming a Merkle tree. Every block contains a record of transactions. It is difficult to tamper with a single block without tampering a chain of blocks.
- It uses asymmetric cryptography which consists of public keys and private keys which are used to encrypt and decrypt data. A Digital signature is based upon the asymmetric cryptography used to verify the authenticity of the data. If a block is altered, then the digital signature will become invalid and the whole peer-to-peer (P2P) network will come to know instantly that something wrong has happened. In a P2P network, all data are kept in sync.
- It is also based upon a decentralized network. All the data are kept on every node, rather than a central location. Data can’t be changed from a single node.
- Transaction Speed
The rate at which data is delivered from one person to another defines a transaction speed. The transaction speed depends upon block size, block time and traffic on the network.
- Block size: It is the unit of work for the file system. Consensus rules are a specific set of block validation rules that every node has to follow. The consensus rules of every blockchain permit their blocks to be of a specific size.
2. Block time: It is a measure of how much time will be required from the initial point of confirmations to adding a new block in the blockchain.
3. Traffic on the network: It is defined as the load on a particular blockchain technology network at a particular time. Requesting for fewer transactions leads to low traffic while requesting for more transactions leads to high traffic. High traffic leads to confirmations delays.
- Traceability: Traceability is a tool which focuses on those suppliers and customers who want more information about the origins of various products and the conditions under which they were produced and distributed. All information and transactions data are time-stamped. Customers can trace a particular item through a Quick Response (QR) code. They need to scan the QR code on their smartphone. It can prevent contaminated products from reaching consumers and help in building a brand reputation.
- Transparency: It is a mechanism in the blockchain used to provide openness to the whole supply chain and inventory. Customers can see who access their data, when and for what purpose. They will also come to know what they are getting and for what they are paying. Whereas suppliers can see every activity which is carried out by each customer. A supply chain is a system which has organizations, people, activities, information, and resources used for transferring products and services from suppliers to customers. An inventory is a list of goods or a catalog of products.
- Cost Reduction: The blockchain can be used to reduce transactions costs as it removes middlemen and uses cryptocurrencies.
1. Cryptocurrency Payments: Many e-commerce platforms accept cryptocurrencies like Bitcoin (BTC) and Ethereum. If you hold such cryptocurrencies, then you won’t have to convert your fiat currency and therefore you won’t be charged with conversion fees. It will save your money ultimately.
2. Removes Middlemen: Blockchain technology works without the involvement of middlemen as it is based on a decentralized network. It allows enterprises to share digital assets on the basis of certain terms and conditions in a truly peer-to-peer manner. The decentralized network means a network can interoperate without the requirement of a centralized source for making and managing decisions. A peer-to-peer P2P network is a network which doesn’t have a central computer and each peer has an equal right on the network.
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