Blockchain: A value-add to Digital Commerce

Introduction to Digital Commerce:

Digital Commerce revolutionized global trade by amalgamating business processes, customers' mindset, and technology. Not sticking merely to e-commerce principles, it extended its direction towards an omnichannel approach, where all the touchpoints are covered and well-integrated.

For Example: a pure e-commerce system captures orders from the ‘Web shop' and the ‘App shop' only, whereas a digital commerce system captures all touch points across all the channels, including tele sales order, offline orders based on sales representative visits, etc. Similarly, it holds the accountability of Content Management, Analytics, Digital Marketing, and others to create an all-inclusive approach. If e-commerce is about online sales, digital commerce concentrates on experience along with sales.

What is a Blockchain?

Since the last few years, Blockchain Technology has gained popularity and is considered a digital disruption. The purpose of a Blockchain system is decentralization and creating trust where it is lacking. Blockchain system is preferred for its enhanced security, hashing, and cryptographic algorithms. This can be considered as a decentralized database, distributed across the entire network. A transaction is added to the block after it is verified by consensus mechanism. Each block in the chain can include only a fixed number of transactions. Any new transactions are added to another block and many such blocks, forming a chain indicate a blockchain functionality. Some of that features that make this technology reliable are -

• Immutable: no changes can be done once a transaction is entered into a block.
• Distributed: no centralization. The update will be at every ledger not on the central one.
• Consensual: this is a protocol similar to voting, where the group of nodes in a blockchain are required to agree on the addition of a transaction into a block.
• Peer-to-Peer: every user is connected to every other user, which eliminated the need for middlemen

Blockchain in Digital Commerce

Blockchain has already proven itself to be the best player in the fintech industry. However, it is assumed to be a great supporter for many other industries, including digital commerce.

The basic idea behind the emergence of digital commerce is transfer of goods and transactions online by trusting the unknown. Not only goods and transactions, but also transactional data and customer data are prone to threats, and there is a need for ensuring data security and user privacy. Blockchain with multiple blocks and its secure cryptographic algorithms makes it almost impossible to tamper with an existing transaction. The higher the number of blocks the greater is the network security.

To understand the application of Blockchain in digital commerce, we need to know the different types of Blockchains.

1. Public Blockchain (Permissionless):

This type of network is open for anyone to join, has no controlling authority, and users do not need to confirm their identity before joining it.

Example: Bitcoin, Ethereum, etc.

To my knowledge, enterprises do not prefer public blockchains to avoid their data safety from being compromised.  

2. Private Blockchain (Permissioned):

Only authorized users within an enterprise or an organization can join the network, which is controlled by an authority.

Example: Ripple, Hyperledger Fabric, etc.

A private blockchain can be used for various business processes, such as Loyalty Management Supply Chain Management, Freight invoice management, etc.

Sample Applications of a Private Blockchain are mentioned below-

• Poste Italiane system uses the Hyperledger Besu Blockchain solution for multi-brand loyalty scenario, using digital wallets, tokens, and smart contracts.
• RTI Blockchain, a startup in the Netherlands has designed a blockchain solution based on Hyperledger Besu for tracking Returnable Transport Items and packaging management.

3. Consortium or Federated Blockchain (Permissioned):

This is a group of enterprises/organizations sharing a network and is controlled by a group of authorities.

Example: Hyperledger Fabric, R3 Corda, etc.

A consortium blockchain can be used for business processes such as vendor onboarding, customer data handling etc. It can widely used for integrated Blockchain services</span

Sample Application of Consortium Blockchain mentioned below:

• Chainyard reduced the vendor onboarding time from 60 days to 3 days, using Hyperledger Fabric, even with many partners in the consortium network such as suppliers, buyers, legal, verifiers, 3rd party developers and auditors, etc.

4. Hybrid Blockchain (Both Permissioned and Permissionless):

It can be a combination of Public and Private or Public and Consortium or Public and Private and Consortium Blockchains.

Example: Blocko, Swisscoin

Various consensus mechanisms work for various types of blockchain. For example, Proof of Work (PoW) is used for Bitcoin. Similarly, there are other mechanisms such as Proof of Stake (PoS), Delegated Proof of Stake (DPoS), Proof of Authority (PoA), Proof of History (PoH), Proof of Importance (PoI), Proof of Activity (PoA), Proof of Capacity (PoC), Proof of Elapsed Time (PoET), etc. The selection of a consensus mechanism depends on business needs and other factors such as node behavior, network latency, resiliency against node failures, etc. where a node represents a participant in the network.

Now that we have understood different types of blockchain, let's look at how blockchain in digital commerce can fulfill some use cases. Let us see some cases below.

Case 1: Suresh is planning to buy a product from an ecommerce website. But he wants to make sure that the product is original, since he doesn't know if the seller is reliable.

Case 2: Swetha is looking at the reviews of a product, but she is not sure how many of them are genuine and how many are fake. Fake reviews confuse the buyers.

Let's consider a POV (Point of View) on Case 1 using Blockchain Technology.   The question that arises is, do we really have to depend on blockchain for such stories as we already have techniques such as Access Authorizations, Holograms, Barcodes, QR codes, RFIDS etc. in market?

Yes, I do agree that they are all effective. We need to understand that every fence is to protect a boundary, but there is a difference between wooden fence and electric fence. Similar is the case with a blockchain, which provides extensive security as compared to other security mechanisms in present in the market. Nevertheless, the evolution in blockchain provision innovative features such as smart contracts and different energy saving consensus mechanisms that makes it more secure and ease to use.

What Is the Future?

We are moving from an era where blockchain is misunderstood as Bitcoin. Bitcoin and other crypto currencies are the steppingstones of Blockchain. Though there are some disadvantages like forking, high electricity consumption, reduced rewards, etc., overcoming all of these using the strong base of the very old Satoshi Nakamoto's theory is a great progress.

There are advancements both technologically and technically. Many new programming languages such as golang, databases such as MongoDB, front end, and backend such as Angular and Node.js has led to the end-to-end lighter versions of blockchain. Hyperledger Fabric is one such example. Similarly, solidity is a programming language used to write smart contracts.

Blockchain is a factor in the ABCD of the digital transformation, wherein

A stands for Artificial intelligence

B stands for Blockchain

C stands for Cloud Computing

D stands for Data Analytics

The future of Digital Commerce with Blockchain seems promising as big players like Amazon, eBay, SAP, Salesforce, etc. are working towards various innovations through patents on the Distributed Ledger Technology and other blockchain-based ideas.

Also, we can expect many more Case Studies, Point of Views, and Proof of Concepts along with production deployments in the ongoing decade. Hope to see no pirated movies, no imitation products, no fake reviews, but simplified processes, trust in the buying experience, and security all over the cycle, denoting digital era is the development era with progress, perfection, and peace.

LTM's Approach

To support digital transformation journeys, LTM has built integrated Blockchain offerings in association with many partners and vendors by incorporating LTM's Blockchain Maturity Model (BMM) with various levels to envision customer's vision and to deliver quick prototypes. We have an ecosystem that strengthens the evangelization of Blockchain.

More information demonstrating our vision, approach, solutions, and services with the help of Videos, POVs, white Papers, case studies, and articles are published in the below URL.

Transform Business Operations with Decentralized Ledger Platforms for Blockchain | LTM  

References:

Hyperledger Fabric - Hyperledger Foundation https://patents.google.com/patent/US10664797B2/en https://patents.google.com/patent/US20210344690A1/en https://patents.google.com/patent/US10581847B1/en https://ecomchain.com/blockchain-for-ecommerce https://www.foley.com/en/insights/publications/2021/08/types-of-blockchain-public-private-between https://www.zeeve.io/blog/guide-to-hybrid-blockchain-benefits-and-use-cases/#:~:text=An%20example%20of%20combining%20a,by%20a%20group%20of%20companies. https://www.naukri.com/learning/articles/consensus-mechanisms-in-blockchain/ https://www.hindawi.com/journals/scn/2022/2213336/