Here is an article kindly written by Mark Taylor of Dawsons which serves as a beginners guide to retail blockchain. Why does this matter? Well, there’s faster payments, lower fees, less administration and no exchange rate fluctuations. As Mark points out, it’s never too early for tech-savvy retailers to familiarise themselves with the next generation technology…
Whilst blockchain is commonly known as the technology that enables Bitcoin, it offers significant opportunities far beyond this. And whilst mainstream adoption is someway off, it’s never too early for tech-savvy retailers to familiarise themselves with the next generation technology.
Blockchain has become the generic term for distributed ledger technologies (DLTs), which helps to explain this topic outside of cryptographic circles but it’s not strictly accurate, nor helpful to the uninitiated.
A blockchain is a database that is shared across a network of computers. Once a record has been added to the block it becomes immutable. Blockchain technology emphasis is placed on decentralised peer-to-peer transactions, almost a libertarian utopia. The database is completely transparent and retains an historic record of all transaction data but is however secured by complex cryptographic rules.
So why does this matter and why should I care?
Blockchain based technologies are said to represent the next evolution of the Internet, Web 3.0 if you like. Unlike, Web 2.0, where online behemoths like Amazon, Alibaba, Facebook and Google dominate, the core principles of blockchain technologies are aimed at uncoupling our lives from this centralised control.
One example of this is payments, whether consumer or business. Instead of being beholden to Visa, Mastercard, Banks and other financial facilitators, for the so-called privilege of being charged to use their services, P2P (peer-to-peer) payment applications devolve controls to individuals, bringing a wealth of benefits.
I’m a retailer, how is this going to help me?
Blockchain technology offers Retail four main benefits; Reduced Costs, Faster Payments, Increased Transparency and Improved Security.
Costs are reduced due to the decentralised nature of automating the transactions and the interoperability of applications, resulting in the elimination of administration. Faster payments are realised in a similar way as blockchains don’t require a centralised infrastructure. Transparency is an integral part of the technology and security is delivered through complex cryptography.
Retail Blockchain is the generic term for disruptive technology to record digital transactions cryptographically on a distributed ledger within the retail sector.
Whilst we are several years away from mainstream adoption, there are some Retail Blockchain applications currently in production to help solve a broad range of retail challenges.
- Digital Payments: consumer and business
- Digital Asset Management: identity, authentication, warranties
- Retail Insurance
- Supply Chain: location transparency, material authentication, anti-counterfeit measures
- Decentralised Transactions: land registry, property purchase, probate
- Personal Identification: employee records, recruitment process, employee credentials, citizenship
- Peer-Peer Marketplaces
- Social Media
- Loyalty & Reward Schemes
- eCommerce Platforms
Blockchain based consumer payments aren’t just about retailers accepting cryptocurrencies, although that is already happening (overstock.com, expedia, subway etc). Blockchain payment applications offer faster transaction settlements, at much lower fees and with better security than credit cards.
In a similar way, retail payments to/from suppliers, can be faster, cheaper and more secure. Retailers and suppliers utilising cryptocurrency as a method of payment across International borders are unaffected by fiat currency exchange rates (GBP to Dollars, Euro to Yen etc), resulting in faster payments, lower fees, less administration and without the downside of exchange rate fluctuations.
A supply chain built into a blockchain using smart contracts are self-executing and so enable payments to be made immediately upon the contract criteria being met. In other words, as the warehouse receipts the stock, invoices are paid within minutes, rather than in days, weeks or even months. Impact on initial cashflow is offset by the significant reduction in admin costs. The reduction in administration can be realised by all interested parties, which may lead to lower prices as suppliers feel the benefit of lower operational costs (hmmm).
Supply chain blockchains are already being used by some of the largest companies in the World; IBM, Maersk, Walmart to name just a few. On a blockchain, authentication of source materials is provided (think CITES, FairTrade, Organic goods), production & shipping status is clearly visible, import & export authorisations managed ahead of time (making movement of goods quicker) and a significant reduction in the vast amount of administration associated with International shipping.
Blockchain based marketplaces already exist, and whereas the Internet gave us eCommerce, blockchain gives us pCommerce (peer-to-peer commerce). Social media, advertising and marketing are set to be overhauled by Web 3.0 technology as people fight back against personal data privacy infringements.
Blockchain is set to revolutionise the Internet. As Sir Tim Berners-Lee begot eCommerce, Satoshi Nakamoto begot Blockchain, Web 3.0 and a decentralised utopia.
More information on Retail Blockchain can be found at https://www.retailsolutions.io