3 ways how Blockchain will change the way we shop
This post originally appeared on blog.up.co
Ever since the convenient eCommerce model created a teeming market of armchair shoppers, it has become harder to return to the old ways of doing business. There are fewer reasons to travel to the store, except for perishable or necessary items like food, but even the grocery segment is being 'technified'. Thanks to a growing number of applications that allow one to have their shopping list delivered directly to the front door. The retail industry is forever on a mission to evolve, and blockchain, one of the latest advancements in technology, will likely bring about its next sea change. How? This post will discuss it briefly.
Blockchain stumbled into retail as it did virtually in every other industry except finance, for which it was designed originally, as the backbone to bitcoin. The first idea for blockchain in retail came by virtue of bitcoin’s fiat value—that one could simply buy goods and services using bitcoin. However, issues with the speed and cost of using cryptocurrency over fiat money quickly erased this idea, and startups began using blockchain to benefit retail infrastructure instead, as they have in healthcare, social media, and countless other markets. Incorporating blockchain into any industry is fraught with obstacles, both regulatory and technical, but companies that succeed will benefit merchants and shoppers alike.
Better Retail Discounts
It’s true that brick and mortar stores are feeling the heat from their online peers, but one way that they can compete is by using the internet as a portal to reach locals. With the onset of the eCommerce trend, companies like Groupon helped physical locations target potential customers in the area, and lure them into the store with a guaranteed discount. Groupon’s model is good at creating one-time customers because those who buy the coupons online are already invested, but it can’t guarantee retention.
With a scarcity of online-to-offline marketing channels, Groupon has dominated the niche despite its low-sustainability model and the difficulty that merchants have when it comes to optimizing their campaigns. However, businesses have caught on to the risk they’re taking when they offer a GroupOn, and are seeking out other options. Thankfully, blockchain is giving them something to hope for, with innovators like HotNow in Thailand illustrating how similar platforms built on a decentralized network are more equitable for everyone. The company uses the HoToKeN cryptocurrency to boost social awareness via mini-games, missions, and bounties, that customers earn tokens for completing. With it, they will eventually be able to purchase discounted goods in their favorite stores, essentially allowing them to be paid for their advocacy.
Easier Cryptocurrency payment
The oldest idea behind cryptocurrency is that is can one day become a form a digital cash. This is the ultimate ambition behind bitcoin, but as it gained more users, the congestion they caused on the network quickly showed that it’s more of a pipe dream than anything else. Slow transactions and exorbitant fees make using bitcoin infrastructure a frustrating experience, especially if volatility and network lag cause users to lose money.
Unfortunately, with governance rights in the hands of a small, insular, and divided community, cryptocurrency will not untangle its mess anytime soon. Blockchain, on the other hand, can be used in leaner, proprietary solutions that better close the gap. Companies like TenX have merged their own settlement layers built on blockchain with traditional finance tools like plastic credit cards and card readers, to give merchants and customers a familiar interface for transacting with cryptocurrency.
While it’s not a perfect solution—many purists would argue that it’s simply a band-aid fix—these companies are doing their part to introduce foreign concepts into an older industry and prepare it for the future. Nevertheless, they’re successfully making their mark on retail already, an encouraging sign for others entering the space.
The missing link for many retail companies is the speed at which the cryptocurrencies they accept can be converted into the kind of money they prefer. Right now, anyone can accept bitcoin at their store and have people send it to their store’s wallet via their own, or an exchange, but it’s an immature process that has inherent cash flow risks. Even with cryptocurrency debit tools like TenX or Monaco, settlement and exchange in the back-end is anything but instant.
If this problem could be solved, businesses would be much more willing to accept cryptocurrency because they’d be able to control their level of exposure to volatility. Business adoption would easily deliver the critical mass necessary to make cryptocurrency a household presence, yet there is still a lot of unclaimed, valuable territory in the blockchain B2B and B2C space. Currently, companies like Request Network are some of the pioneers likeliest to succeed. Request Network lets individuals or businesses send Requests to others via the blockchain, and recipients can pay the ‘invoice’ sent to them with any fiat currency or cryptocurrency that they prefer. Smart contracts handle all the underlying exchange mechanisms autonomously and quickly, and the decentralized ledger provides proof that a transaction in the correct, proportional amount took place.
With tools like this, businesses don’t even need to use cryptocurrency to feel the benefits of the blockchain. A relatively basic need that Request Network address is a less burdensome payment solution for companies that operate across borders.
The retail sector was one of the first to be impacted by the dot-com revolution, and it will be among the first to take advantage of blockchain as well. With hundreds, if not thousands of companies already working on products that could change the relationship surrounding our retail experience, the future certainly looks bright.