The emergence of the digital age has impacted every sphere of our lives, but it is the eCommerce sector that has experienced remarkable growth due to the digital boom. Many eCommerce trends have emerged over the years that have not just made our shopping experience easier but also more enjoyable. Since the time it was first introduced to the world, it has become a popular medium for product vendors to sell their products and customers to shop. As the eCommerce sector evolved with modern technology, the potential of an online marketplace became practically limitless. The latest innovation in this sphere has been the use of cryptocurrency for online shopping. In this article, we will take a look at the current state of eCommerce sector and how helpful will be the use of cryptocurrencies to further increase the growth of the eCommerce sector.
The Growth Of eCommerce
Going by the statistics, eCommerce is boasting of some impressive future growth numbers. By 2021, the total number of internet users is expected to reach 4.6 billion. This is a great news for the eCommerce companies because as more people have access to the internet there are more potential marketplace users. Considering the current statistics also, the growth of online sales is currently ballooning. Let’s take a look at the following statistics:
- According to Shopify.com, Global eCommerce sales will reach $4.5 trillion in 2021.
- According to Statista’s 2017 report, the eCommerce sales of the United States reached $396 billion in 2016 and it is predicted to reach a massive 684 billion by 2020.
- As per BigCommerce, 67% of millennials prefer online shopping over conventional shopping.
- Statista’s 2017 report has revealed that 57% of online shoppers shopped online in the past six months from an overseas retailer.
- An annual survey by analytics firm comScore revealed that shoppers now make 51% of their purchases online.
ECommerce sales in the U.S. have been growing constantly, but the growth is just over 9%. This suggests that there is much room for eCommerce growth in the coming few years. The eCommerce companies are certainly going to benefit from the massive increase in the number of users and money entering into the digital economy.
Cryptocurrencies Are The Future Of Online Shopping
As cryptocurrency and blockchain development technology continue to evolve, technologists and researchers are trying to find new ways to implement them. The growth of cryptocurrency has been remarkable in the past few years. Let’s take a look at the statistics to understand this further:
- Although cryptocurrency and blockchain technology market are at a nascent stage now, it is expected to show a compound annual growth rate of ~35% over the next five years.
- Bitcoin has become the most popular cryptocurrency. Its users are expected to reach 200 million by the year 2024.
- Since 2016, the number of cryptocurrency users has grown from approximate 3 million to approximate 20 million.
- As per a survey, over 60% of consumers today are aware of cryptocurrency.
These statistics suggest that cryptocurrency is here to stay. Both buyers and sellers need to acknowledge their challenges and formulate an informed approach to what’s on the horizon. That said, let’s now understand how cryptocurrencies will shape the eCommerce sector in the future and what challenges lie ahead.
How Cryptocurrencies Are Expected To Shape The Future Of The eCommerce Sector
The future of both eCommerce sector and cryptocurrencies are intertwined. In the global eCommerce summit, held in Barcelona, it was predicted that the rise of digital currencies and blockchain would change the face of eCommerce.
Recently, an eCommerce platform in South Korea began accepting 12 cryptocurrencies as a form of payment. Surprisingly, in the beginning of 2018 itself, 44% of the gamers purchased or traded games on the blockchain. Among the big names, companies like Microsoft, Subway, KFC Canada, Expedia.com and others allow users to buy their products using cryptocurrency.
This positive trend indicates that the idea of shopping using cryptocurrency is starting to enter the public awareness. Small businesses aren’t missing out on the opportunity too.
Cryptocurrencies Have Many Benefits For The eCommerce Sector
Cryptocurrencies, like Bitcoin, are basically tokens having certain financial value. They can be exchanged in lieu of digital currencies for shopping and other matters. Cryptocurrencies were introduced just 9 years ago, but in this short span of time, it has become quite popular. The role of cryptocurrencies and blockchain in eCommerce has become a hot topic of discussion these days. Many industries and entrepreneurs consider the technology as the natural next step for the growth of eCommerce sector.
- Lower transaction fees: Both buyers and sellers can benefit from cryptocurrency transactions. Today, most people use PayPal, credit cards and debit cards to complete their business transactions, where the minimum fee is around 2.5%. The fee is even higher for international payments. Cryptocurrencies allow buyers and sellers to be the master of their own transactions and have complete control over the amounts they deal in.
- Faster transactions: Today, blockchain networks can facilitate multiple times the number of cryptocurrency transactions per second. Some can even fulfill eCommerce transaction demands, reaching 10,000 transactions per second.
- No middlemen involved: Bitcoin’s peer-to-peer technology is designed to facilitate cheap, instantaneous and secure settlement of transactions without the need of banks or other financial institutions.
- Secure Transactions: Security is one of the best features offered by cryptocurrencies. Since all the transactions are recorded on the blockchain, crypto payments are safe, secure and irreversible. Blockchain technology provides a level of encryption that is virtually impossible to break.
- No risk of theft: With cryptocurrencies, there is full anonymity and no risk or threat of theft.
- No geographical barriers: With the use of cryptocurrencies, geographical barriers are not a problem anymore. This brings great convenience to international transactions.
- Rewards and incentives: When customers shop using cryptocurrency, they get rewards and incentives, which is another major benefit of using cryptocurrencies for shopping.
- Variety of transaction options and tools: Cryptocurrencies enable users to use a variety of transaction options and tools that they can use according to their own convenience.
Considering these benefits, the businesses who adopt cryptocurrencies will likely be the ones who benefit the most from it in the long term. Despite the benefits, there are still many businesses that are wary of using cryptocurrencies. Here’s why.
Challenges In The Way Of Cryptocurrencies
Although cryptocurrencies are gaining popularity across the globe, there are still some challenges that need to be addressed:
- Unstable rates: Firstly, they are quite volatile. Every action taken by the federal government to control the virtual economy causes the rates of virtual currencies to fluctuate. This is the reason why online merchants are still wary of accepting bitcoin and other similar cryptocurrencies. Although, online merchants stand to make a profit if the value of the cryptocurrency rises but the losses can be overwhelming if the rates go down.
- Lack of regulation: There is no single global regulator to monitor cryptocurrency transactions. This makes it difficult for online merchants to track fraud and other criminal activities.
- No one to hold accountable: Due to the lack of a central governing body, the consumers also don’t have anyone to hold accountable in case of frauds or other criminal activities.
While everyone is confident and optimistic about the benefits of blockchain technologies and cryptocurrencies to the eCommerce sector, the challenges related to trust, consumer rights protection, instability of rates remain. To address these challenges, the E-Commerce marketplace will have to develop some safeguards against the abuse of cryptocurrency in order to build the trust of both buyers and sellers.
One solution is to integrate cryptocurrency into our traditional financial system. This would offer a new level of counterfeit and fraud protection.
Digital payments appeared quite revolutionary when they were first introduced, and they also presented significant new challenges. With time, although some of the challenges still remain, a large majority of them have been addressed. Today, a majority of transactions take place digitally, which have made our lives quite easier. Similar future is being predicted for the cryptocurrencies as well which offer great benefits to the eCommerce sector. Although there are a lot of challenges to overcome, it is expected that with time the challenges will be addressed. This will make cryptocurrencies mainstream payment method for eCommerce shops.
Blockchain development technology and cryptocurrencies are ushering in a new era, where they have the potential to propel us to new heights not even yet imagined. Many businesses today are embracing the technology to obtain a cryptographically secure and transparent system. EnukeSoftware is one of the leading Companies in India that is helping businesses understand blockchain applications and the immense benefits that can be drawn from the technology. Discuss your project idea with our experienced blockchain developers and consultants, who have hands-on experience building solutions on top of this emerging technology. Our team of Blockchain experts will create a custom product for you from scratch. They will help you select and integrate an existing framework to help save on development time and cost. To know more, get in touch with our Blockchain experts today!