Traditional retail has been ‘disrupted’ by online shopping. But now online is set to be disrupted by the advent of blockchain, which will irreversibly change retail and its associated payments. But just what is blockchain? We try and explain in simple terms…
We have written many times about the continuing demise of the British high street. This year has already seen Toys-R-Us and Maplin close their doors, Next admit to the “toughest trading conditions for 25 years” and the Bargain Booze chain admits that it is “close to administration.”
It is no better in the restaurant and hospitality sector. The last 12 months have seen a raft of closures among restaurant chains with Prezzo the latest as they announced the closure of 94 outlets with the loss of 1,000 jobs.
What is the reason? You can mutter about business rates and the fall in the value of the pound after Brexit, but we all know the real reason. We are living our lives online. Amazon can supply virtually everything we need. If we want something less mainstream there is Etsy and NotontheHighStreet. Any number of companies will deliver our food and – if we cannot be bothered to cook – then simply tap the JustEat app and our takeaway will be delivered in 15 minutes.
But nothing lasts forever…
…And with technology changing our lives ever more quickly, it appears that nothing now lasts for very long. In the same that online shopping radically impacted the high street, here comes blockchain technology to radically impact online shopping.
Blockchain firm Eligma is planning to raise £17m from the sale of tokens later this month, with the digital currency able to be used across a range of online stores. The firm has created a platform connecting existing e-commerce sites and second-hand marketplaces. A ‘one-stop shopping account’ can be created using tokens to buy goods online.
Just what is blockchain?
Let us take a step back at this point. A one-stop shopping account sounds like a good idea. No more needing to remember all those different passwords and if you are paying by tokens then you can buy from retailers abroad without worrying about currencies. And all powered by blockchain…
But what is blockchain? It is the technology behind the virtual currency Bitcoin, it is apparently going to change the face of countless industries and it is a word we are hearing more and more. So let me try and explain – as simply as possible, for my own benefit – exactly what blockchain is.
According to Wiki, a blockchain is a continuously growing list of records – called blocks – which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data.
Clear? No, not to me either.
Blockchain is a database existing on multiple computers at the same time. It is constantly growing as new blocks are added to it – and they are linked, so they form a chain. Think of it as a medical record – neither the doctor nor the patient should be able to modify the records and that is how it is with blockchain: no-one can go back and modify the previous blocks. So by definition, it is independent, transparent and secure – and it will have a significant impact on sectors such as finance and healthcare.
The idea for blockchain has been around since 1976, but it took the development of Bitcoin in 2008 to really bring it to the fore. We have written about Bitcoin previously: there will almost certainly be a widely-accepted virtual (or crypto) currency running alongside traditional currencies in the near future. Whether it will be Bitcoin or a competitor remains to be seen, but it will be ‘powered’ by blockchain, a technology which can not only send physical money but also be used for tracking goods in a supply chain and helping companies monitor supplies and suppliers.
All of which adds up to it having a big impact on online shopping…
Eligma founder Dajan Roljic says that
“online shopping is still failing its target market. Product research is time-consuming, multiple registrations for different stores are needed, fixing prices for second-hand listings isn’t easy and, all too often, it is not possible to pay with a crypto-currency.”
Eligma’s stated mission is to turn every household into a business, allowing everyone to shop in all the online stores in the world, check the value of everything in their home and – if they want to – know the best time to sell those items. That is fine by me if it means I do not heave to freeze to death at a car boot sale once a year…
On the face of it, a platform which brings everything together sounds really attractive. You want to buy a hand-made leather briefcase? That is fine – the best price is from that retailer in Argentina. Jewellery for your wife’s birthday? Have you tried the Vietnamese equivalent of Etsy?
Most of us would have some reluctance to a transaction like that, simply on the grounds of security. Do I want to give my credit card details to someone in Vietnam? If Facebook can have a data breach affecting 86m people, how secure is my payment data in the Far East?
That is going to be one of the huge advantages of blockchain: one of its major benefits is its ability to secure itself. There is no central file when it comes to a record being stored on blockchain. Instead, entries are distributed across the entire internet, resolving with each other every ten minutes to sync updates around the world. This prevents hackers being able to alter transactions and divert funds: it also means that your contract is not completed – and payment finally made – until your jewellery arrives from Vietnam. When it comes to security, blockchain is about as secure as it gets.
Quite where that leaves the UK high street is anyone’s guess. Napoleon famously said that the British were a nation of shopkeepers: it seems to me that a good working definition of optimism right now is opening a shop.