Many e-commerce professionals treat blockchain as the devil they don’t know, avoiding it based on uncertainty and hearsay. This is a mistake.
Digital retail executives have surely heard plenty about the blockchain that is positive. But they’ve also been warned about exorbitant startup costs and the possibility that the technology is more hype than substance.
Like any technology, its applications and cost savings vary across industry. Companies that succumb to the fear of expense may miss a substantial opportunity to save money in the long term.
Digital retailers who embrace the blockchain will face their own challenges. The technology needs to be further refined and fleshed out to add value for e-commerce professionals. Its transaction speeds and scalability remain questionable.
Too many big-picture thinkers fail to grasp the technology’s intricacies and aren’t equipped to implement it. But the hurdles of cost, education, and implementation exist in every industry considering blockchain adoption. These should be seen as mere speed bumps, not insurmountable obstacles.
Here’s what experts see as the most pressing challenges facing blockchain in e-commerce.
1. Justas Pikelis, Co-founder of Monetha
“There are several challenges [to blockchain adoption], including low transaction throughput, speculative instead of transactional use of cryptocurrencies, and an overall lack of refinement.
The low transaction rate is still probably the most impactful one: when Bitcoin is able to process only 7 transactions per second, how can it accommodate the needs of consumers worldwide?
Fortunately, there are solutions to solve the scaling problem, such as the Lightning Network, and they are already being applied.”
2. Dejan Roljic, CEO of Eligma
“The greatest challenge is the mistrust which always surrounds any new technologies. Remember the advent of mobile phones? There were apprehensions ranging from health to security concerns, and yet, we can not really imagine our lives without phones nowadays.
Blockchain is one of the safest technologies today, but people are apprehensive about possible hacks. Also, the instability of the crypto market causes mistrust in the general technology that underlies it, although crypto is just one small part of blockchain products out there. For this reason, communication with the general public and awareness-building is extremely important.”
3. Payson Johnston, CEO and Co-Founder of Crowdz
“The number one challenge facing blockchain adoption in e-commerce is the lack of truly transformative applications. So much of the work in blockchain to date has focused on the technical architecture, and that is obviously critical.
The original DARPAnet did little to generate interest and innovation in business applications until it was transformed into the publicly available Internet with such options as marketing products and services online and selling goods via online catalogs. We believe the same kind of transformation will be necessary in order for blockchain to become a truly defining force in e-commerce.
We are already beginning to see hints of this potential, with applications ranging from blockchain-based money transfers to currency conversions. But the emergence of a much wider range of applications will make it clear to businesses throughout the world that blockchain will become as essential to commercial operations in the next few years and the Internet became essential to the commercial world some two decades ago.
We are absolutely confident that this is going to happen, and business—as well as daily life—will become that much more efficient and abundant because of it.”
4. Susan Akbarpour, CEO and Co-founder of Mavatar Technologies
“The top challenge facing blockchain adoption in e-commerce is the same facing blockchain adoption in every other sector: fear. Fear of blockchain’s decentralized and democratic nature, its novelty, and lack of well-defined user interfaces and applications.
The word “blockchain” might perk up a lot of curious ears, but it won’t necessarily help convert interest into action. For blockchain e-commerce technology to cross the chasm to mainstream adoption, it will require a combination of prominent pioneering organizations, clever marketing, and well-designed systems that drive the complexity of this technology to the background and introduce applications the mainstream can touch, understand and use.”
5. Monica Eaton-Cardone, Co-founder and COO of Chargebacks911
“Beyond simple misunderstanding by businesses and consumers about what blockchain is and can do, the key obstacle to adoption is the upfront cost.
Using a blockchain system for inventory management, for example, delivers clear benefits in the long run. You have a more efficient system, allowing you to prevent retail shrink, target customer demand, and better allocate resources.
However, that involves a complete overhaul of your technology and practices, which can be incredibly expensive. Many smaller businesses might want to adopt a blockchain system, but simply don’t have the resources to do so.”
6. Rob Maille, Head of Strategy and Customer Experience and Co-founder of CommerceCX
“To fully appreciate the business value of blockchain, organizations need to understand the technology’s capabilities and align those capabilities to business problems or opportunities.
Lack of education around the technology is where a lot of companies are finding the most barriers to entry with using it. To move past those barriers, they must also see past how they do business today and instead look at how they could do business in the future using Blockchain.”
7. Tanya Yablonskaya, E-commerce Industry Analyst at ScienceSoft
“There is an obstacle to wide blockchain adoption in e-commerce. Large financial investments are needed to develop, implement and support a blockchain-based solution.”
8. Julian Kahlon, CEO and Founder of Project Verte
“Scalability. E-commerce by definition is transaction-heavy and requires blockchain networks designed to support that. As long as the existing (and centralized) choices for payment processing and digital asset management are more convenient and reliable than blockchain-based alternatives, the industry will stick to what it knows.”
9. Nate Masterson, CEO of Maple Holistics
“Blockchain and e-commerce are on shaky ground because the market has yet to accept cryptocurrency as a reliable system. This hurdle is the major difference maker right now, so long as the efficacy of cryptocurrency is called into question, blockchain is going to have a hard time getting off the ground.”
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