blockchain ecommerce, data integration, ecommerce blockchain

Blockchain in Ecommerce – Beyond Cryptocurrencies


Blockchains are a powerful technology.
They allow for a large number of interactions to be codified and carried out in a way that greatly increases reliability, removes business and political risks associated with the process being managed by a central entity, and reduces the need for trust. They create a platform on which applications from different companies and even of different types can run together, allowing for extremely efficient and seamless interaction, and leave an audit trail that anyone can check to make sure that everything is being processed correctly.”

Vitalik Buterin, co-founder of Ethereum


The Blockchain Cryptocurrency Misconception

Discussing potential uses of blockchain in ecommerce almost always leads to talk of cryptocurrencies and the use of Bitcoin (and its cousins) as a payment method. Most people believe that blockchain and bitcoin are one and the same. The reality, however, is that using blockchain through cryptocurrency as a payment method is only the most obvious, but limited, use of the technology in retail. And although Bitcoin is built on  blockchain, it is not blockchain.

Bitcoin is all the rage right now, trending ever higher, and probably getting ready to implode just like it did in 2011. In 2011, the value of Bitcoin dropped from $31.00 to $2.00 in the space of five months; this seems to be set to happen all over again, with winners and losers on both sides. But regardless as to the market fluctuations of Bitcoin and other cryptocurrencies, the fundamental concept they’re built on — blockchain — holds far more potential to disrupt ecommerce and even the economy as we know it.

So Bitcoin is on another tear, and CryptoKitties continues to be all the rage of the blockchain gaming world (and, in the process, is taxing the resources of the Ethereum platform). But ultimately, the underlying technology of blockchain is here to stay, and is getting prime-time coverage around the world.

But how can blockchain apply to the world of ecommerce? With the newness of the technology and emerging expertise still coalescing, many are still exploring the core concepts and are just starting to think application – VL OMNI included. Lets explore some blockchain uses cases in ecommerce.


I am going to start with the obvious: payments. There have already been many recent blog articles discussing how Bitcoin can be used in ecommerce.

Most scenarios use BitPay, embedded into the checkout process using BitPay’s prepackaged integrations. BitPay recently announced that they had raised $30 million in Series B funding, and are now considered the largest and most reputable Bitcoin gateway. Their shopping cart plugins are elegant, and work to provide an alternative to credit cards. This works well in countries where credit cards are not wide-spread and peoples’ access to formal financial institutions is limited.

There are alternatives to Bitpay and many of them are plugins that access a cryptocurrency wallet in one form or another. Bitcoin is fairly widespread since became the first retailer to accept Bitcoin in 2014. And herein lies one of the challenges I see for many retailers: which cryptocurrency to standardise on. If you download the Jaxx wallet, there are currently 53 tokens and currencies to choose from! So if you are looking at offering alternative currencies like Bitcoin and others, you want to make sure you work with a reputable provider and reputable currency. Otherwise uptake will be limited, as you’ve effectively bet on the wrong horse.

Product Information

Digital product information is the foundation of the digital ecommerce economy: we trade on the value of our digital information. Many companies struggle with product information and getting that data out to the various channels they work with. Most build up their product detail manually, often with typos and errors. These issues cumulate, and in the end, reflect poorly on the business’ customers’ digital experience. I have never quantified the time people spend on putting together and managing product detail, but I assume the investment is enormous. A PIM (Product Information Management) platform like inRiver  is a good place to standardise product detail, then pushing that curated data out to a variety of channels. The issue, however, is how do we provide transparency and data integrity to the consumer when the product data in many marketplaces is fraught with errors and misinformation?

Vancouver startup Venzee recently announced a private beta of their application of blockchain to product information with the launch of Mesh. It is still early days, but it will be very interesting to see how the Mesh platform handles the creation of the Genesis Block (see the diagram and accompanying video, below) when data is loaded manually, and the interconnected ecosystem of channels doesn’t update the Genesis Block. Perhaps it will be a case of compensation that will spur adoption. It will also be very interesting to see how willing consumers are to pay for miners to update the block as the data progresses through each channel. Rather than being a public blockchain, Mesh is an example of a private blockchain a closed system so maybe the miners will internal.

Transparency and Integrity

My final example is a a more complex example of blockchain usage in the entire ecommerce process, from the placing of an order to the shipment of the order, with all steps in between. A complete, holistic picture of the ecommerce experience — not just the payment process. I won’t go through the entire flow as it is self-explanatory.


Keep scrolling for an animation of this diagram.
Download the Flowchart Here.



There are some technological challenges with the example that I have laid out. The challenges are namely cryptographic; with multiple players and the complexity of the ecosystem with the number of partners, the number of public and private keys to manage will be an issue. The number of smart contracts that would drive the processes and the immutable data that moves between participants has implications on scalability. This will be an interesting challenge given current Ethereum platform constraints. The CryptoKitties example actually serves well in highlighting some of the issues of scalability and latency when an application becomes popular. How will high transaction volumes in the marketplace be handled?

This example would be set up as a private blockchain, that could function on the Ethereum platform where all parties adhere to the smart contracts in place. Payments could flow between parties as part of the process, but this would require miners to validate the blockchain and they would need to be compensated for their efforts.  There is even more granularity and complexity that could be added here — but that’s for another blog article.

I would love to hear from blockchain techies on some of the technical issues with the example outlined above. It’s a workable model, but one with complexity. You can read our first article here.


Watch the Video:
Blockchain Uses: Transparency and Integrity in the Ecommerce Cycle

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