Do you think that in five years every second transaction in e-commerce will be processed via blockchain? No? Well, that’s how people thought of plastic credit cards versus cash a few decades ago when it came to traditional businesses.
There is no doubt that Web3 will drastically change the way e-commerce works. Using cryptocurrency payments in e-commerce stores is becoming as common as accepting PayPal, Klarna, Visa or Mastercard. Businesses that fail to adapt their e-commerce platforms to accept cryptocurrencies will soon be out of business.
How Web3 changed the eCommerce landscape
Thanks to the converging forces of Web3 – blockchain, decentralized finance (DeFi), AI and machine learning – new, intelligent algorithms can analyze and adapt to offer user-centric experiences. In addition, Web3 will be much richer than previous versions of the Web. The decentralized nature of Web3 creates the perfect platform for the fast and transparent flow of information that is not subject to censorship by a central authority.
In addition, Web3 eliminates intermediaries like Facebook who take users’ money (and personal information) when they buy something online. At the same time, all the 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.
Related: Latin America is crypto-ready – just integrate it into their payment systems
As more businesses move from Web2 to Web3, many merchants and consumers have started using crypto payment solutions.
In Web2, most online payment platforms like PayPal and Stripe charge transaction fees of around 4%. Naturally, this makes it difficult for companies to remain competitive without raising prices. Not only are crypto payments smooth, but they are also gaining traction as a payment method. With stablecoins today, people don’t 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’s e-commerce launch, there is still a long way to go before Web3 can deliver the full range of benefits previously mentioned. However, the advent of smart contracts and Web3 platforms like Hyperledger has drastically changed the value exchange landscape. Hyperledger Fabric was developed by companies like IBM for specific business cases that optimize supply chain operations. Access to the general ledger with Fabric allows organizations to view the same immutable data, ensuring accountability and minimizing the chances of counterfeiting.
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 inventories and shipments, take appropriate action to resolve issues and detect fraud. This allows the consumer and the business to anticipate delivery at a specific time. All packages can be easily monitored via blockchain explorer while protecting customer privacy.
Additionally, blockchain can be used to create and own a global whitelist of genuine or reliable customers and vendors, which Unstoppable Domains is doing with its Identity Verification for Web3. Such a whitelist reduces false positives and helps uncover actual fraud. Unlike traditional e-commerce payments, Web3 allows people to easily place their orders by eliminating intermediaries and chargebacks.
A new regulatory environment
The advent of Web3 in e-commerce will change compliance requirements related to personal data, including the European Union’s General Data Protection Regulation, and raise important questions such as: B. Identity authentication without revealing personal, sensitive information.
However, Web3 developers are already experimenting with using zero-knowledge proofs as a solution to prove to the other party that they are in possession of certain information (e.g. nationality or age over the border) without actually revealing the details .
It is not necessarily up to customers to decide how much personal information they disclose. This will only happen if companies adopt the appropriate technology and if regulators allow it. However, this cannot be done unless someone is willing to argue for it.
Related: PayPal enables the transfer of digital currencies to external wallets
Given this tremendous opportunity, more companies should consider jumping on the Web3 bandwagon. Finally, they can improve their visibility, reputation and cost management in the e-commerce game to stay ahead of the curve while moving digital data across borders safely and freely. To do this, clear regulations need to be developed to support the broader adoption of blockchain technology in this area.
Enterprises also have a crucial role to play in the world of Web3: they must ensure they are equipped with the latest security solutions to prevent them from becoming a target for cybercriminals. In the recent occurrences of cybercrime, hackers have stolen customers’ funds as well as customers’ personal private information, which inevitably leads to reputation damage for the company.
Having the latest tools and systems would be little without an adequately staffed team of information security professionals to ensure key system vulnerabilities are remedied in a timely manner and key controls are regularly tested. Web3 companies would definitely need to devote resources and attention to addressing these risk areas in their business 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 should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.