Is Bitcoin the future of e-commerce currency?
With the introduction of Bitcoin, five years ago in 2009, the world of online shopping and financial transactions in general has seen a notable transformation. The term ‘Bitcoin’ is given to the unit of currency in which the payments are maintained and recorded. This product of the financial realm comes under the cryptocurrency or digital currency category.
The Bitcoin advantage
The exciting concept has paved a more efficient pathway for consumers and merchants all over the world. With the introduction of Bitcoin, online transactions have been transformed into an easy task without the involvement or interference of financial institutions. Consumers can now purchase and maintain units of the currency in their digital wallets, which can then be transferred for the purpose of purchasing products and services online.
Bitcoin, although there are some risks attached to it, is a very fascinating piece of technology. However, one glaring drawback is that the online public log only maintains the Wallet ID of consumers and not their real names. This makes it vulnerable to illegal activities and transactions.
In spite of these shortcomings, Bitcoin is pegged as an instrument that will change the way in which financial value changes hands on the internet. E-commerce is no different of course, and Bitcoin does its bit in this industry too.
There are a few distinct advantages of this financial instrument that set it apart from others.
1. Swift, calculated transactions
Bitcoin provides the perfect solution to the problem people initially faced with delayed online transactions. In today’s fast moving world, we need everything done in a matter of seconds. People no longer have to wait for online approvals, or face interference from financial institutions when performing online transactions. Instant payment leads to instant shipping of products and instant provision of services. Therefore, Bitcoin hasn’t just changed the way consumers handle their transactions, but it has also made it easier for merchants to provide services on receipt of prompt payments. This cryptocurrency’s creation is based on mining and this is accomplished via complex mathematical calculations. Bitcoin functions as a store of value and this is its most broadcast feature. The fact that it doesn’t require the intervention of any banks or financial institutions is what makes it carry out transactions at a higher frequency.
2. Elimination of transaction fees
Now consumers can easily purchase products and services from merchants in different countries, without having to bear the burden of unjustified transaction fees. Merchants too can benefit when it comes to payments. They do not have to go through the agony of chargebacks, in case a customer is unsatisfied with the delivery pattern, the product or the service. The reason why fees interfere with online transactions is that the activity goes via credit card networks, payment gateways and approval procedures. Dodging the involvement of financial institutions leads to elimination of fees. In addition, Bitcoin makes life easier for those who fret over budgets. People claim to have saved hundreds of dollars in fees every month.
3. Ease in overseas transactions
Bitcoin has greatly contributed to online sales and purchase transactions in not just the developed countries, but also developing countries. Banks or financial institutions may not always be easy to come by in developing countries, making online transactions hard to achieve. This has now changed! People are no longer hesitant to carry out online trade with overseas merchants. Bitcoin helps conduct purely peer-to-peer transactions and the payments can be transferred back and forth the proposed destination effortlessly. So now, consumers all over the globe can partake in e-commerce.
4. Builds trust and confidence
Bitcoin helps consumers and merchants trust each other, as there are no hidden or unwanted rules and regulations to abide by. Therefore, consumers and merchants are allowed to carry out their business deals in the manner they prefer. Consumers get priority and this enhances their trust in the entire procedure. Financial institutions usually portray the same consumer-comes-first attitude; however, we all are quite aware of how financial institutions function. They generally prefer keeping complete control over financial transactions, in addition to overheads of course. When it comes to Bitcoin, consumers have complete control over their financial transactions and can access their records as they please.
Another important security feature that Bitcoin provides its consumers is the provision to create a new and different Bitcoin ID for each purchase transaction, giving them ample online security. In cases where companies’ data are hacked, the consumer’s information is safe from being tampered with. Bitcoin is exceptionally secure, as it possesses features such as:
- Creation of a back-up for your digital wallet keys
- Encryption of wallet keys
- A cold storage facility, wherein the keys are deposited offline
5. Encourages Improvisation
Bitcoin has created a forum for various entrepreneurs to start up similar ideas. While certain limitations exist, these can be overcome by understanding the shortcomings and initiating a process based on improvisation, thus making transactions cheaper, faster and more efficient. The model can be improvised and applied to any product or service, based on the features of that particular product, service or application. The last six months have seen a tremendous change in the way people shop online. Bitcoin’s growing approval and acceptance in the market has made e-commerce a more approachable mode of economic transactions. With the progress made in this sphere, the involvement of banks and financial institutions is likely to diminish.
How Bitcoin plays out in the e-commerce and digital field
Bitcoin has the potential not only to make online shopping more efficient, but it can also be adopted when looking for a solution to smoothen out various other concerns associated with the industry. The method in which it functions has created avenues for its usage in various other spheres of life. The current methodology currently can even be used as security of company copyrights, security of votes during elections, security systems for homes, etc.
Considering the fact that Bitcoin is part of the digital world, it does have its share of pros and cons. While it may possess the ability to promote a more efficient global commerce platform at an affordable price, along with ease of transactions, it also stands as a threat wherein it acts as a gateway for illegal activities. Well, as all things digital go, eventually, there will be a solution to this too and then, Bitcoin just might be the best thing to happen to the e-commerce industry.
Image Credit: Antana on Flickr