Whether you’ve heard of Blockchain or not, you’re about to hear a lot more. Peter Hinssen in 2016, innovation and technology trend-watcher said, ‘I believe that Blockchain is the most important technological revolution since the discovery of the internet in 1995.’
Blockchain is the technology that forms the basis of bitcoin, the most popular and well known of the virtual currencies. Having said that, the method of functioning is not something that can be managed by your average Jo. It is a highly complex system and the reason why banks are having to study the technology behind it, in an attempt to learn as well as ensuring their payment infrastructure is safe and secure for public use.
In layman’s terms, Blockchain is a decentralized network of computers that together keep a virtual copy of all online transactions via an encrypted virtual chain. With this system, platforms such as banks and payment agencies are able to transfer directly between two individuals safely and securely even though you may not know the sender or receiver.
Created in 2008, Bitcoin’s aim is to present itself as an alternative means of payment. As of today, it’s true that Bitcoin is still primarily a form of investment but in order to enable faster and more efficient transactions, the virtual currencies split into Bitcoin and Bitcoin Cash at the end of 2017. As time goes on, companies are reaping the benefits of land and bank independent means of payment.
In Brisbane airport, for example, Bitcoin can be used by travelers in the shops as well as in the terminal. The main advantage here is, it exempts the question of correct currency, not to mention the non-existent exchange rate and quite simply less money to carry around in your pocket!
Singapore were the ones who opened their doors to the first online shopping mall where shoppers can spend using virtual coins. The virtual shopping mall, MegaX aims to young target tech-fanatics and only accepts Bitcoin or MGX coins, a currency on its own that raised 2.5 million US Dollars to invest in the start-up to the shopping centre in the first funding stage.
The technology behind Bitcoin has been adopted by more than one large financial institution. The reason for this is that it allows for the implementation of large, complex, and expensive transactions in a cheaper, more transparent and effective fashion. As we speak, more venture capital is being pumped into the companies working alongside Blockchain than was ever pumped into the commercial internet back in 1996. Who knows what’s to come, but one thing’s for sure, Blockchain isn’t going anywhere anytime soon!
Blockchain – the platform killer!
As more and more innovative brands and retailers are experiencing, Blockchain technology has some exciting new opportunities in store for us. Not only does it have the potential to be a valuable aid for retailers, it could also eventually replace them.
The transparent Chain
Thanks to Blockchain, a product’s origin is easily traced. Take the European supermarket, Carrefour for example. They work on an entirely transparent supply chain from manufacturing to processing. Each step is monitored through a decentralised database that allows customers to follow a product’s entire route from production to their plate.
Other food manufacturers such as Dole and Nestlé are following suit. It’s for this reason that they’re partnering up with IBM in order to better track a product’s movement through the production and this is possible thanks to Blockchain. This type of tracking also allows for faster monitoring as opposed to earlier technology. Walmart, for example, can now able to track a mango’s journey in 2.2 days rather than 7.
Blockchain is also applicable when used to help combat counterfeit items. Alibaba has invested in this and now, thanks to Blockchain, no single individual person or supplier can manipulate or create fake results.
Erase the supermarket – manufacturer straight to the consumer?
Will it ever be or is it already possible to cut out the middleman? Russian start-up business, INS Ecosystem has plans to do just that. The company’s founders believe that this could reduce the product process by up to 30%.
FMCG-Giants Unilever, Mars, Friesland Campina and Reckitt Benckiser have all signed collaboration deals, as like pharma manufacturers and more local brands. Seven out of twenty of the largest FMCG manufacturers have said to have already shown an interest to join this way of working.
According to INS Ecosystem’s founder, Peter Fedchenkov, believes this type of system allows for safe, efficient and lower-cost trading between the manufacturer and the consumer, effectively eliminating the supermarket as to go-between.
All that being said, why use Blockchain? Well, it allows for a new generation of platforms, more transparency within the supply chain and the use of its own virtual currency. On top of that, it allows customers the opportunity to collect points using their INC tokens and rewards via their own personal loyalty programme.
Even though customers are not bound to just using INS tokens, the marketing campaigns and loyalty programmes are all linked to them. Compare it to ‘air miles’ if you will, but thanks to smart contracts in the blockchain, this system is much more advanced, cheaper and more tailored to each customer. INS only requires a 1% transaction fee. The reason for this is that the system aims to operate as independently and cheaply as possible for its customers. INS’ intervention as platform aggregator is therefore restricted to an absolute minimum, and this is thanks to the decentralised blockchain technology.
Moscow and Amsterdam are the first countries to enjoy this new system. Moscow is the hometown of the crypto enterprise and Amsterdam profits from the company’s collaboration with PostNL. INS Ecosystem highly values the ‘last mile’ partner, because that is the direct link between the digital and physical world, between the platform and the consumer.
Yep that’s right, we can imagine you thinking, why hasn’t Amazon invested? Rest assured, these plans are of course in the pipeline. Amazon has already registered several domains in crypto currencies, possibly as a pre-emptive measure, but the likelihood is that they already have plans of their own. Blockchain has the ability to turn Amazon into an even bugger power force ecosystem, just like INC Ecosystem is planning.
Its own crypto currency would aim to eliminate all the possible exchange rate issues on the global market. We would no longer need a bank or any other external financing option because it can create capital rounds for the currency as well as using it as an investor tool. Blockchain is designed to be exempt from any third party that may need to intervene. Cryptocurrencies are in fact deliberate boycotts of traditional banks.
On top of this, there is also the potential for Amazon to become its own independent bank. More than half of Amazon’s shoppers who took part in a survey in 2018, revealed that they would be happy to consider an Amazon coin. Almost 45% said that they would open an account with the online power force. 38% said they felt they could trust Amazon as they would an independent financial bank and 30% even said they would consider taking out an Amazon mortgage.
This phenomenon could be the ultimate making of Amazon in creating an even bigger online power force. Considering given the potential plans, it would only need a delivery service as a third party, effectively going from a manufacturer to consumer. They would get rid of banks, wholesalers and supermarkets. If Amazon acquires a global logistical supplier, the Seattle-based retail giant will own every proportion of the chain.
The entire chain with no interruptions
In hindsight, Amazon wouldn’t technically need so many retailers and partners on its marketplace because it would be able to provide a limitless number of products directly from the Blockchain. Another fundamental advantage of Blockchain is that it can work from a pull-model, this is according to INS Ecosystem’s founders.
Blockchain removes the boundaries between consumers and manufacturers, which is how the consumer can indicate what he needs. The range of products will no longer be determined by the retailers because the platform aims to give direct access to its consumers. There are said to be no practical limitations because the chain doesn’t result in expensive stocks and time resources are not wasted during the process.
The advantages for the manufacturer are of course direct access to valuable data straight from the consumer as opposed to go having to go through the retailer. It also results in overall lower retail channel costs and no need to take a retail margin into consideration. INS also wish to add that a blockchain platform will bring smaller brands to the forefront, comparing to the struggle to continually replenish store shelves. Amazon would more than likely bring its own brand to the stage, which would give one direct line to the consumer – with no interruptions!
Although there is no official evidence to suggest that Amazon is currently working on its own crypto-platform but it comes as no surprise that it’s on the cards!