As with most new technologies in an early adoption phase, blockchain solutions, too, can flourish only in the right regulatory framework. For the retail and ecommerce industries specifically, financial authorities need to devise clear guidelines for how blockchain can be utilized. Without such guidelines, companies around the world will be reluctant to adopt blockchain solutions due to the risk of legal ambiguity.
A number of multinational companies are adopting or have dabbled in blockchain technology in the ecommerce space to enhance their security and track their supply chains. Household names such as Amazon
According to Brent Hale from TechGuided, “ecommerce platforms tend to integrate the technology to create a chain of information that vendors and customers can easily access to check the origin and authenticity of the product. This, in turn, increases the trust and loyalty of the consumer. Also, the vendor can identify the damaged goods even before their arrival.”
In terms of how regulatory authorities may hinder or help blockchain solutions within the retail and ecommerce space, the answer depends on the type and extent of regulations.
Sensible regulations that cut down on potential fraud and hold vendors to the same standards as traditional payment companies and marketplaces will likely accelerate adoption as enterprises don’t like using unregulated vendors.
“But if the regulations go too far then they’ll diminish the appeal of using this technology in the first place. The best regulations will take advantage of the unique benefits of blockchain technology, such as total transparency and the ability to automate important activities to cut down on human error and potential fraud,” said Omid Malekan, Professor at Columbia Business School and the author of The Story of the Blockchain, A Beginner’s Guide to the Technology That Nobody Understands.
The benefits of blockchain, according to Malekan, are faster and cheaper payments, particularly for cross border commerce. Solutions like stablecoins allow anyone anywhere to receive dollars that settle almost instantly for pennies, a stark contrast to card or bank-based payments that can take days to settle and involve high swipe fees.
“By virtue of being omni-asset, blockchains also allow ecommerce providers to use the same infrastructure to send things like rewards or collectible NFTs directly back to their customers wallets.”
Many benefits
Retail and ecommerce sectors are expected to benefit from blockchain due to the technology’s potential to provide secure, real-time access to data, namely by creating an identical copy of the ledger across the computer network can ensure data transparency and accountability.
“The ability to track the real-time status of shipments will particularly benefit the retailers. They will have information about each stage of the supply chain – from procurement, shipment to delivery – and formulate remedial measures if there is a problem. Moreover, blockchain data can be hard to alter. So, the retailers will have secure, correct data,” said Kunal Sawhney, CEO of Kalkine Group.
The opportunities of blockchain are about figuring out how to integrate crypto rails with traditional payment ones, using things like gift cards and virtual credit cards. There are also opportunities in integrating crypto into PoS solutions and building enterprise grade wallets for merchants.
“A major challenge remains that on-chain transaction fees for networks like Bitcoin
Beyond a buzzword
Regulators must ensure that the interest of consumers or users is protected, striking the right balance in regulation when it comes to retail and ecommerce can potentially accelerate the broader adoption of blockchains.
“Beyond payment, there’s also supply chain management and traceability in the retail and ecommerce space. That’s where blockchain solutions can also be fully utilized. However, regulation needs to be in place to ensure the data being uploaded is secure and compliant. A proper framework needs to be examined and developed to build the best Web3 experiences beneficial for end-users,” said Sandeep Nailwal, cofounder of Polygon
Blockchain is a buzzword in the technological industries across the globe. However, blockchain is expected to strengthen and greatly improve the ecommerce industry. All this in terms of aiding business processes.
“We believe that blockchain will be able to reduce certain intermediate costs, will enhance the interoperability of some contracts. With the application of blockchain, the unnecessary obstacles that might have risen because of intermediaries might also be relieved,” said Christian Velitchkov from Twiz IO.
Ultimately, it comes down to government action – or inaction. Governments, globally, should devise regulations that support a level-playing field for all, provide financial oversight, customer protection, tax regime, conflict redressal, to name a few.
“Without a robust regulatory framework, blockchain opportunities could remain untapped,” noted Sawhney.
Source: https://www.forbes.com/sites/dennismitzner/2022/05/12/smart-regulations-can-boost-blockchain-adoption-in-retail-and-ecommerce/