From Elon Musk’s tweets to the rise of NFTs, a lot has contributed to crypto fame. But did you know ecommerce and crypto go hand in hand? Here’s how.
Unless you are living under a rock, you would have heard of cryptocurrency. But most people do not fully understand what crypto means and how it holds value.
Cryptocurrency is a digital currency that you can use just like a regular fiat currency (Dollars, Euros, etc.) to buy products and services. Bitcoins is arguably the most popular crypto in the market, but social media also brought other currencies, like Dogecoin, to the limelight.
In this article, we explain what cryptocurrency is, how it works, and why the ecommerce sector is interested in it.
What is Cryptocurrency?
Cryptocurrency is a virtual or digital currency that ensures secure transactions owing to cryptography. Forbes describes it as ‘’decentralized digital money, based on blockchain technology.’’
The first-ever cryptocurrency that graced the market was Bitcoin, made by Satoshi Nakamoto. In the paper describing the principle of Bitcoin, Nakamoto described it as an electronic payment system that uses cryptographic proof rather than trust.
Currently, there are thousands of cryptocurrencies, although not all of them are as valuable as Bitcoin. According to CoinMarketCap data, the total value of cryptocurrencies in August 2021 was around $1.9 trillion, which is a decline from $2.2 trillion in April 2020.
How Does a Cryptocurrency Work?
Cryptocurrency works quite like a credit card or PayPal. But instead of dollars, you exchange digital assets to buy goods and services. You can make a transaction through a digital wallet, which will be your cryptocurrency wallet.
The ‘wallet’ is software where your cryptocurrency is stored. You can also transfer funds in your wallet to another cryptocurrency wallet – sort of how you use mobile banking to transfer money to a peer’s account.
All wallets have ‘keys’ that are synonymous with passwords for your bank account. The keys are long strings of letters and numbers that keep your wallet safe.
Whenever there is a discussion about cryptocurrency, you would hear the term ‘blockchain.’
Blockchain is the database that keeps track of all the transactions and crypto total. The data is stored in ‘blocks’ that are chained to each other in chronological order.
Cryptocurrency is decentralized due to an absence of a central authority, such as the government, overseeing the blockchain. To ensure security, the blockchain uses cryptography. Cryptographic codes or hashes are used in linking these blocks together, creating a barrier that hackers cannot penetrate.
Why is Ecommerce Adopting Cryptocurrency?
Cryptocurrency is not only attractive for blockchain enthusiasts but is also being adopted by giants in the ecommerce industry, such as Walmart and Amazon. Here are some of the reasons behind this:
Low Transaction Fees
Payment apps and credit card companies charge high transaction fees that can be up to 5%. On the other hand, crypto fees can be as low as 1% for each transaction.
Anonymous Transactions
Another benefit of cryptocurrency in ecommerce is that customers can make online payments without disclosing their identities. On the one hand, the customers do not have to compromise their sensitive information.
On the other hand, online stores do not have to worry about maintaining customer privacy.
Fraud Reduction
One of the main reasons for building blockchain technology was to lower the instances of fraudulent activity. So, incorporating cryptocurrency into ecommerce is helpful in reducing the instances of chargebacks and frauds. There is also more transparency in the space as a whole.
Why Walmart is Interested in Crypto
Walmart is not the first Fortune 500 company to be interested in crypto payments. However, the company made the news when it posted a listing for a cryptocurrency expert.
According to the listing, Walmart was on the hunt for a ‘visionary leader’ who has at least ten years of experience in technology or product management to develop a blockchain strategy.
It seems like Walmart’s interest in crypto stemmed from Amazon’s similar listing. The ecommerce giant posted a job on their website, looking for someone to ‘own the vision and strategy for Amazon’s Digital Currency and Blockchain strategy and product roadmap.’
In a CNBC article, the Amazon spokesperson said, ‘’We’re inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon. We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible.”
By adding crypto as a form of payment in online shopping, Walmart will definitely see an increase in usage since buyers are warming up to the idea of making payments using cryptocurrency.
Walmart is not alone in this race, as other Fortune 500 companies, like PayPal, Apple, and JPMorgan Chase are also looking to hire cryptocurrency experts.
It is evident that the ecommerce market is interested in crypto due to the increasing number of consumers who are trading cryptocurrencies. A NORC survey at the University of Chicago showed that 13% of the US citizens had traded crypto in the previous year.
That is a huge reason for the ecommerce market to accept cryptocurrencies for online shopping.
More Retailers are Looking to Add Crypto as a Payment Method
Many named companies are accepting crypto as payment today, including Microsoft. The software company accepts Bitcoin as payment for its services, such as Skype and Xbox Live.
Some other retailers accepting cryptocurrency include Whole Foods, Home Depot, NewEgg, and Starbucks.
Moreover, many food brands are also in the works of accepting cryptocurrency. Burger King Venezuela recently collaborated with Cryptobuyer, which is a platform converting crypto to regular currency.
Apart from these popular names, many other tech, fast food retailers, and even art galleries are accepting cryptocurrencies. In May 2021, the luxury auction house Sotheby’s announced it would accept cryptocurrency as a payment method for the Banksy artwork on display.
Final Words
Judging from the increased interest of retailers in cryptocurrency, it is expected that the coming years will see an influx in the number of companies accepting this alternate form of payment.
Therefore, if you have any tokens in your wallet, you will be able to use them for shopping pretty much anywhere in the future.
