Do you believe that in five years, one in two e-commerce transactions will be settled on the blockchain? Nope? Well, that’s how people thought of plastic credit cards versus cash a few decades ago when it came to brick-and-mortar stores.
There is no doubt that Web3 will radically transform the way e-commerce works. Using cryptocurrency payments in e-commerce stores will become just as common as accepting PayPal, Klarna, Visa or Mastercard. Stores that do not adapt their e-commerce platforms accepting cryptocurrencies will soon find themselves bankrupt.
How Web3 Changed the Ecommerce Landscape
Thanks to the converging forces of Web3 — blockchain, decentralized finance (Challenge), AI and machine learning: New intelligent algorithms can analyze and adapt to deliver user-centric experiences. Additionally, Web3 will be much more inclusive than previous versions of the web. The decentralized nature of Web3 creates the ideal platform for a fast and transparent flow of information that is not subject to censorship by a central authority.
In addition, Web3 eliminates intermediaries like Facebook which take a share of users money (and personal data) when buying something online. At the same time, all details of our transactions are public, for better or for worse. Improving the security and convenience of online transactions will increase the volume of e-commerce transactions and encourage businesses to adopt crypto payments.
As more and more companies switch from web2 to web3many merchants and consumers have started using crypto payment solutions.
In Web2, most online payment platforms such as PayPal and Stripe charge transaction fees by about 4%. This, of course, makes it difficult for companies to stay competitive without raising prices. Not only are crypto payments frictionless, but they are also growing in popularity as a payment method. With stablecoins today, people no longer have to worry about converting to fiat and the hassle of withdrawing funds to their bank accounts.
The Power of Blockchain in Old and New Business Models
Similar to Web2 e-commerce adoption, there is a long way to go before Web3 can deliver the full range of benefits mentioned earlier. However, the introduction of smart contracts and Web3 platforms like Hyperledger has dramatically changed the landscape of value exchange. Hyperledger Cloth was developed by companies like IBM for specific business cases that optimize supply chain operations. Ledger access using Fabric allows businesses to view the same unmodifiable data, ensuring accountability and minimizing the risk of forgery.
Consumers can track the progress of their orders and trace each item back to its origin. At the same time, supply chain operators can monitor inventory levels and shipments, take appropriate action to resolve issues, and detect fraud. This allows the consumer and business to expect delivery at a certain time. All packages can be easily monitored through the blockchain explorer while protecting customer privacy.
Moreover, with the blockchain, a global whitelist genuine or trusted customers and suppliers can be created and owned, which Unstoppable Domains does with its identity verification for Web3. Such a whitelist reduces false positives and helps detect real fraud. Unlike traditional e-commerce payments, Web3 makes it easy for people to place orders by eliminating middlemen and chargebacks.
A new regulatory environment
The advent of Web3 in e-commerce will change compliance requirements related to personal data, including European Union requirements General Data Protection Regulationraising important issues such as identity authentication without revealing personal and sensitive information.
However, Web3 Developers are already experimenting with the use of zero-knowledge evidence as a solution to prove to the other party that he is in possession of certain information (such as nationality or age above the limit) without revealing the details.
It is not necessarily up to customers to decide how much personal data they will provide. This will only happen if companies adopt the applicable technology and regulators allow it. However, that may not happen unless someone is willing to make a case for it.
With such vast possibilities, more companies should consider jumping on the Web3 bandwagon. After all, they can improve their transparency, reputation, and cost management in the e-commerce game to stay ahead of the game while moving digital data securely and freely across borders. For this to happen, clear regulations must be designed to support the wider adoption of blockchain technology in this space.
Companies would also have a key role to play in the world of Web3: ensuring that they are equipped with the latest security solutions to prevent them from becoming the target of cybercriminals. Recent cyber crime events have seen hackers seize fundsas well as the personal and private information of customers, which inevitably leads to damage to the reputation of the organization.
Having the latest tools and systems would mean little without a sufficiently large team of information security professionals to ensure that major system vulnerabilities are addressed in a timely manner and key controls are subject to regular testing. Adequate resources and attention should certainly be devoted by Web3 companies to address these areas of risk in their operations.
Raymond Hsu is co-founder and CEO of Cabital, a cryptocurrency wealth management platform. Prior to co-founding Cabital in 2020, Raymond worked for fintech and traditional banking institutions including Citibank, Standard Chartered, eBay and Airwallex.
This article is for general informational purposes and is not intended to be and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.