Business owners should ditch PayPal and move to blockchain

Do you believe that in five years every second e-commerce transaction will be settled on the blockchain? Not? Well, that’s what people thought about plastic credit cards versus cash decades ago when it came to traditional stores.

There is no doubt that Web3 will revolutionize the way e-commerce works. The use of cryptocurrency payments in e-commerce stores will become as commonplace as accepting PayPal, Klarna, Visa or Mastercard. Stores that don’t adapt their e-commerce platforms to accept cryptocurrencies will soon find themselves out of business.

How Web3 Changed the Ecommerce Landscape

By combining the forces of Web3 – blockchain, decentralized finance (DeFi), artificial intelligence and machine learning – new intelligent algorithms can analyze and adapt to provide a user-centric experience. In addition, Web3 will be much more inclusive than previous versions of the Web. The decentralized nature of Web3 creates an ideal platform for the rapid and transparent flow of information, uncensored by a central authority.

In addition, Web3 eliminates middlemen like Facebook that take a portion of users’ money (and personal data) when they buy something online. At the same time, all the details of our transactions are publicly available – for better or worse. Improving the security and convenience of online transactions will increase the volume of e-commerce transactions and encourage businesses to accept payments in cryptocurrencies.

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As more companies move from Web2 to Web3, many merchants and consumers have started using crypto payment solutions.

On Web2, most online payment platforms such as PayPal and Stripe charge a transaction fee of around 4%. This, of course, makes it difficult for businesses to remain competitive without raising prices. Cryptocurrency payments are not only seamless, but are also gaining popularity as a payment method. Today, with stablecoins, people no longer have to worry about converting to fiat and having trouble withdrawing funds to their bank accounts.

The Power of Blockchain in Old and New Business Models

Similar to Web2’s e-commerce adoption, there is a long way to go before Web3 can provide the full range of benefits mentioned earlier. However, the introduction of smart contracts and Web3 platforms such as Hyperledger has radically changed the value exchange landscape. Hyperledger Fabric has been developed by enterprises such as IBM for specific business cases that optimize supply chain operations. Accessing the registry with Fabric allows enterprises to view the same immutable data, ensuring accountability and minimizing the chance of spoofing.

Consumers can follow the progress of their orders and track the origin of each item. At the same time, supply chain operators can monitor inventory and delivery levels, and take appropriate action to resolve issues and detect fraud. This allows the consumer and the company to expect delivery at a specific time. All packages can be easily tracked using the blockchain explorer while protecting client privacy.

In addition, a global whitelist of authentic or trusted customers and vendors can be created and owned with blockchain, which is what Unstoppable Domains does with identity verification for Web3. This whitelisting reduces false positives and helps detect actual fraud. Unlike traditional e-commerce payments, Web3 makes it easy for people to place their orders by eliminating middlemen and chargebacks.

New regulatory environment

The advent of Web3 in e-commerce will change the compliance requirements associated with personal data, including the European Union’s General Data Protection Regulation, which will raise important issues such as 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 have certain information (such as nationality or age above a set limit) without actually revealing the details.

Customers do not necessarily have to decide how much personal data they are going to provide. This will only happen if companies adopt the applicable technology and get regulatory approval. However, this may not happen, unless someone wants to make an argument in favor of it.

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With such ample opportunity, more companies should consider jumping on the Web3 bandwagon. After all, they can increase their e-commerce transparency, reputation, and cost management to stay ahead of the curve by moving digital data securely and freely across borders. For this, clear rules need to be developed to support the wider adoption of blockchain technology in this area.

Companies also have an important role to play in the Web3 world: making sure they are equipped with the latest security solutions so they don’t become a target for cybercriminals. Recent instances of cybercrime have resulted in hackers stealing funds as well as personal information from customers, inevitably resulting in reputational damage to an organization.

The availability of the latest tools and systems would mean little without a well-staffed team of information security professionals to ensure that key system vulnerabilities are addressed in a timely manner and key controls are regularly tested. Adequate resources and attention must certainly be dedicated by Web3 companies to address these risk areas in the course of their business.

Raymond Hsu is the co-founder and CEO of Cabital, a cryptocurrency wealth management platform. Prior to co-founding Cabital in 2020, Raymond worked at fintech and traditional banking institutions including Citibank, Standard Chartered, eBay and Airwallex.

This article is for general informational purposes and is not intended and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are those of the author only and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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