Is Blockchain and not Bitcoin the Future?
Despite the meteoric rise of Bitcoin in 2017, we should be cautious of investing in cryptocurrencies in 2018. Bitcoin may have made your mate, Jake, a millionaire overnight, but it is likely he could lose it just as fast. What we should be focusing on in the long term is blockchain, not Bitcoin, especially in the sphere of online shopping.
The Bitcoin Bubble
The long-term stability of unregulated cryptocurrencies is extremely uncertain despite capturing the zeitgeist of tech communities from across the world. In particular, Bitcoin has all the hallmarks of a classic speculative bubble caused by an exaggerated expectation of its future capabilities. As this exaggeration decreases, the bubble will burst causing the price of Bitcoin to normalise and panic selling, which drives down the price of Bitcoin further.
The ‘Bitcoin revolution’ is likely to dissipate as Initial Coin Offering (ICO) fraud becomes more prevalent and governments prevent it from having general market relevance. With respect to ICO fraud, some companies are pretending to have legitimate ‘tokens’ for sale and subsequently raise substantial amounts of money using practices comparable to that of a Ponzi Scheme. Governments, such as the US Government, are cracking down on cryptocurrencies by categorising it as property rather than currency, which makes it subject to taxation (e.g. capital gains tax).
What Is Blockchain?
Everyone is obsessed by cryptocurrencies, but the future lies underneath these digital coins in the form of distributive ledger technology (also known as blockchain). The genius of the blockchain is demonstrated through the recording and verification of every transaction made without the need for a central bank (such as the Bank of England) or governments to be involved in the process. Essentially - for those who like to sound clever - blockchain involves peer-to-peer (P2P) software on computer nodes that sync up with one another, enabling a self-governing transaction network. This information, recorded on the ledger, is maintained by ‘miners’ that ensure each transaction is valid and documents the date each transaction takes place.
Online Shopping and Blockchain
The future for online shopping lies within this distributed ledger technology. Whether you are concerned about security, additional transaction charges, or simply not getting what you purchased, blockchain has the solution:
Heightens Security: It is almost impossible to hack the blockchain. All the information on the ledger is kept safe using cryptography and hash functions, preventing anyone from changing the data once it has been recorded. Good luck trying to hack the millions of nodes in the blockchain with different keys simultaneously.
Removes Additional Transaction Fees: A number of online stores and marketplaces will charge you a fee for simply making a transaction on their website. With blockchain you can purchase any product directly from the seller, without a third party payment process, thus removing the possibility of extra costs. Similarly, smart contracts (which are coupled with blockchain) ensure the price of every purchase is fixed and throughout the purchasing process. In other words, because there will be individual contracts at each part of the supply chain, you will not face any unexpected tax, shipping, or other fee when completing the transaction.
Always Get What You Asked For: When shopping using blockchain technology you will be able to see the entire transaction history of the person you want to buy from as well as the reviews of other customers that have dealt with them. Intelligent software could, therefore, recommend products to you from sellers that have a proven track record. Furthermore, even if something does go wrong, warranties and return policies will form part of smart contracts embedded within the blockchain, ensuring a seamless purchase experience.
The global blockchain technology market is expected to grow to $7.6 Billion by 2021 and transform the faces of many industries. If the e-commerce industry properly embraces this technology the online shopping experience could become far safer, smoother, and simpler.