Blockchain and online trading

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As the global crypto community continues to grow with each passing day, it is almost impossible for one to not have heard the phrase “blockchain”.

It is an innovative and unique concept and proof of what the technological progress can help us achieve. But what exactly does blockchain stand for and how does it work?

Blockchain is a decentralized digital ledger, that is used to record and store data across a computer network. What sets it apart from other online databases is the distinct method it operates on. Recorded information is stored on a growing list of records, known as blocks, who are linked using cryptography. Modification of data is nearly impossible, as it requires network consensus and the alteration of all subsequent blocks. Blockchain operates on a peer-to-peer basis, protecting it from problems, that usually plague centrally held databases. Corruption of data or hacking of the system would require a practically impossible amount of computer power, making it one of the most secure networks on the internet.

Blockchain was first invented in 2008 by Satoshi Nakamoto, the person or group, responsible for the creation of Bitcoin. It was implemented alongside with the cryptocurrency and served as a ledger, where transactions were recorded. Since then, the network has developed into something great and revolutionary, making the popularization of cryptocurrencies and the creation of various platform possible. According to records, the file size of the bitcoin blockchain has grown to the phenomenal 100 GB in 2018.

What makes blockchain technology and cryptocurrencies so popular among the public, is that they cut out the middleman, resulting in fast, secure, cheap and transparent services. The use of encryption technology eliminates all of the security risks that come with using the internet. Individuals can make international transactions in a matter of second, free of charge, while enjoying a state-of-the-art security system, that keeps all their digital assets safe.

Ethereum is perhaps the most ambitious blockchain based project up-to-date.

It is an open source platform, that has its own language, which developers can use to create their own programs. Though, what makes Ethereum stand out is the creation of Smart Contracts. Smart Contracts are converted into a piece of code, that is stored on and monitored by a network of computers. The system is efficient, reliable and cheap and can be used in a wide range of situations and sectors, from finance to government.

Online shopping and social commerce are two other industries, that could greatly benefit from the implementation of blockchain technology. The online shopping market reached over 2.3 trillion USD in sales last years and it seems it is only going to continue to grow. Retail businesses are always looking for innovative way to evolve and grow their companies and it is clear that using the potential of blockchain technology is going to forever change the way we shop.

Transparency is perhaps what blockchain is based known for.

It is not a surprise that a lot of platforms based on the technology strive to improve the connection between consumers and sellers, building relationship based on trust. In a world, where online shopping is powered by blockchain, people will be able to track a product’s entire history, ensuring that what they are buying is the best possible quality and it came from where it says it is. What is more, thanks to the use of Smart Contracts, consumers will never again have to worry about purchasing faulty and fake goods.

The biggest challenge when it comes to incorporating cryptocurrencies and blockchain technology into any industry are perhaps some of the yet unresolved economic and legal issues. But many online platforms have taken it upon themselves to solve these issues and build successful business models. For instance, the inability to use fiat money is a great reason why the general public has not adopted this piece of technology yet. But platforms, who have made the exchange from fiat to cryptocurrencies and vice-versa as easy as possible and understandable, seem to be attracting a lot of users. What is more, developers often incentivize people to use their platforms, rewarding them for being involved and active, by rewarding them with tokens, coupons or other various forms of discounts. The goal is to create a sustainable eco system, with an easy-to-use interface and a transparent relationship between businesses and consumer.

Despite a lot of the issues that might come with the mass adoption of cryptocurrencies, their popularity only continues to grow. The decentralized system, which eliminates transaction and third-party fees, fast and cheap services, is proving to be beneficial for everyone, consumers and merchants. It seems that it is only a matter of time before we enter an era of a blockchain powered world.

There are dozens of online stores in Bulgaria that work with cryptocurrency and accept this kind of payments. For example if you would like to add it as payment method to your online store a good option would be Coinbase. Coinbase is a cryptocurrency business platform but its creators offer additional online store modules which could be installed into your online store and this way you would be able to accept payments with some of the most popular cryptocurrencies such as: Bitcoin, Ethereum, Litecoin and Bitcoin cash. For more info – click here.

Security-wise Coinbase is relatively safe system and at the same time the payment method integration process (which we have already applied successfully to few projects) is pretty quick.

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Other system you could use for your online store is Coin Payments. It has larger variety of cryptocurrencies which could be used in your online store but the integration process takes longer to configure.

Another way to integrate cryptocurrency into online business is Smart-Contract. Literally it is what it means – a “smart contract”. It’s a contract between two sides who could exchange everything – products, services, properties, money, etc… Smart-Contract takes out the middleman completely but this doesn’t make it less secure. This kind of contracts are written in special code – Solidity and inside are listed all actions, rights, obligations and possible sanctions in case of contract violations. When the Smart-Contract is ready it must be uploaded to guarantee transparent contractual relationships.

Although this kind of coded contracts sound like something new, they have been introduced back in 1994 by Nick Szabo (lawyer and cryptographer). Szabo concludes that decentralization may be fully applied in contractual relationships. This way the whole process becomes simplier and the contract itself may be converted in computer code and stored into a network that uses blockchain and because of this the contracts also get known as “blockchain contracts”.

A clear example of Smart-Contract could be any sports bet.

Everyone could bet a certain amount of money on the final result of a football game. All bets are placed before the beginning of the match and once the bet is placed the money gets “locked-in” until the end of the game. After the football match ends the blockchain contract receives automatically information about the final result and also automatically calculates who the winner is out of all participants. Afterwards the total amount of money collected from all participants in the same bet gets automatically transferred to the winner.

In this case there is no central place from where you could take your money. No one can deny the money transfer as well as no one can change clauses in the generated contract.

For e-commerce use the Smart-Contracts are generated after the customer clicks on “I agree with the Terms and Conditions” to confirm the order. Which means that it is strongly recommended to read through all “Terms & Conditions” no matter how long the read could be.

If you decide to work with this kind of smart contracts you must be extremely careful with their uploading and online storage. When you upload blockchain contracts in a chain, the chain itself does not allow data deletion. It means that you upload personal data of your customers onto a place from where it can not be deleted. First of all this action is not fair to your clients and second you could end up sued, so make sure you think it through carefully before you act on it.

We hope this info would be of help or at least shed some light on the basics of e-commerce cryptocurrency payments. If you need assistance with integration of cryptocurrency payment method do not hesitate to contact us. We would be glad if you shared your cryptocurrency experience or asked questions in the comments section below.

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