Cryptocurrencies have come a long way since the day when Laszlo Hanyecz paid 10,000 bitcoins for two large Papa John’s pizzas nine years ago, marking the first purchase of physical goods with digital currency. Although bitcoin is still far from universally accepted by sellers, thousands of merchants around the world accept cryptocurrency – and their ranks are growing every day. The latest big developments in this area emerged at this year’s consensus conference, when Flexa released its partnership with a number of major American retailers. Flexa’s payment app, Spedn, will allow users to pay for purchases at more than a dozen Barnes & Noble, Office Depot and Whole Foods stores with cryptocurrencies.
Payments, as we know, are just the tip of the blockchain iceberg, however. Although the increase in the number of stores and chains that accept digital currency remains an important development towards mass adoption, there are several other areas where Digital Linear Tape (DLT) technology can be useful for the detail. Some of these solutions are already in place and working, and others promise to bring massive change over the next few years.
The Kaspersky Lab Global IT Security Risks Survey, released in February, found that a respectable 13% of more than 12,000 consumers in 22 countries used cryptocurrency to pay for their purchases online.
Businesses that are embarking on the path of accepting cryptocurrency can be motivated by a variety of reasons. Some may want to appeal to younger, technologically advanced, savvy customers with advanced technology, while others trust the technology and are optimistic about cryptocurrency. The volatility of the digital currency remains the main deterrent for large retail businesses. Intermediaries like Flexa, who are ready to put themselves between businesses and the crypto market to absorb part of the uncertainty, prove useful because the big players are ready to experiment with the new payment method but are wary of potential risks.
It seems that this indirect model could become a dominant means of facilitating the access of large retail chains to payments in digital currency in the coming years. This is how, for example, the recently announced crypto-payment partnership between Starbucks and financial technology company Bakkt should work.
The ability of the Blockchain to facilitate the transmission of value and information may result in more sophisticated and multifunctional forms of payment in the near future. A recently unveiled application, Civic Pay, is a striking example:
The solution will allow vending machine operators to simplify access to age-classified goods by combining payment, identity verification and reward points in one transaction.
Loyalty programs are another important area of the retail industry that could use optimization and enhanced fraud protection. An essential tool for establishing a lasting relationship with a client, these transaction-based programs often rely on a less secure infrastructure than that of “real” payments, which has led to a substantial increase in crime linked to loyalty fraud. during the last years. Both value and personal data are subject to theft. In addition, many reward programs do not provide enough value to customers because the means to spend the hard earned points are limited.
Introducing blockchain into the equation could help retailers solve these two problems. On the security side, hackers and fraudsters will find it much more difficult to break into a distributed ledger system than a system that stores all of the data in a centralized database. In terms of consumer value, creating a token-based reward ecosystem open to third-party businesses is one way to give customers a multitude of diverse ways to spend their points.
This is exactly what American Express is seeking to achieve with its rewards platform based on Hyperledger, designed to allow merchant partners to create personalized rewards offers for customers of the finance company. The Swiss company Qiibee, which helps companies to personalize their loyalty programs, is a leading player in this field.
Supply chain monitoring
Another well-established family, extensively covered with blockchain retail use cases, relates to the ability of technology to make the origins of goods transparent and verifiable. The requirement for such transparency may arise from different considerations, depending on a particular industry, the three main concerns being security, authenticity and ethical sourcing.
The United States Centers for Disease Control and Prevention, the branch of the federal government responsible for promoting and protecting public health and safety, estimates that 48 million people fall ill each year, 128,000 are hospitalized and 3,000 die from disease. of food origin. Epidemics of diseases like E. coli and salmonella caused by poor racing are still not irregular. Once the contaminated product is transferred to the huge supply chain of a large retailer, it becomes difficult to determine its origin in order to quickly eliminate the threat. It can take several days before the source is identified, which could cause heavy losses to the chain and put customers at risk.
Industry leaders have come to understand that recording every actionable event throughout the product journey – from farm to table – on a blockchain is an effective solution to this problem. It could also improve stores’ ability to quickly identify and remove recalled foods, among other logistical advantages. The IBM Food Trust initiative, which provides its members with a blockchain platform for tracking products through each stage of the supply chain, was launched in the fall of 2016, when the US giant Walmart retail began testing the system. Since then, Walmart has started to require suppliers of certain types of products to implement the DLT solution. Other US and global players in the industry – such as Albertsons, Unilever, Nestlé and Carrefour – have also joined the club and many more are ready to do the same.
The need to verify that the product in question was obtained ethically is closely linked to food safety, but that consumer demand is conceptually different. As millennials and generations become the driving force of global capitalism, concerns about corporate environmental and social responsibility are becoming an increasingly determining factor in purchasing behavior. Again, recording the product journey on an unchanging ledger and creating a user-friendly interface that allows customers to get a clear picture of its origins can become a powerful tool for businesses to build trust and be rewarded for their transparency and their responsible procurement practices.
Examples include the World Wildlife Fund – Australia, which advocates the use of OpenSC, a blockchain-based supply chain tracking tool that allows consumers to make ethical choices when shopping. of food products. Customers will be able to obtain information on the origins and life cycle of products by scanning a QR code on the packaging.
In addition, the Ford Motor Company is testing an IBM system running on Hyperledger fabric that will detect reserves of cobalt, a material used in lithium-ion batteries, which is experiencing increasing demand due to the boom in the electric vehicle market. Much of the world’s cobalt is mined in the Democratic Republic of the Congo, where child labor and slave-like working conditions are widespread. The Blockchain initiative would address these problems by providing western companies with a means of ensuring that the cobalt they buy comes from mines where a certain level of labor protection is applied.
Finally, in the case of luxury consumer goods, it is of utmost importance to establish the provenance of an item. Leading players in the diamond industry, such as Alrosa and De Beers, have adopted chain-based solutions to locate gems from mine to mine and to verify that their origins are proper – literally and compared to previous owners. Luxury clothing brand Alyx will implement Iota’s blockchain solution to showcase sustainable practices applied at each stage of its supply chain.
Customer data management, security and sharing
Retailers regularly record, store and use large amounts of customer data. Blockchain applications linked to streamlining processes in this line of work constitute a less explored but extremely promising area. Exploiting the benefits of distributed ledger technology could improve security, give customers more control over their data, and create new forms of marketing to help retailers meet consumers’ needs with greater accuracy and capture value otherwise omitted.
With the help of a recommendation system based on artificial intelligence, retailers would be able to identify customer needs and offer them highly personalized offers. With advertising spending optimized, merchants will be able to reward those who have chosen to open their data with tokens that can be spent in stores.
With a blockchain data sharing system in place, customers could also proactively inform retailers of their needs and preferences, by sending them shopping lists in the form of smart contracts. Combined with the potential of the Internet of Things to outsource the fulfillment and delivery of such orders to machines, blockchain could become a fundamental infrastructure for the new era of fully automated purchasing.
Passionate about tech and new technologies. For 4 years, I have been closely following the cryptocurrency market and new developments in blockchain technology.