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The cryptocurrency market has lost much of its splendor in the last year. Bitcoin, which reaches a historical high at the beginning of this year, has plunged beyond 80% from January. Despite the volatility and pain in that market, however, the underlying blockchain technology remains an incredibly promising asset.
Blockchain has been slow to take off in the space of payments. There are several reasons for this, including:
- Confusion: as a word of order has become, relatively few people really understand blockchain technology.
- Skepticism about new technologies: the tools that promise to eliminate decades of entrenched practices are always difficult to sell.
- Fear: Blockchain is closely associated with the cryptocurrency market, which has its long-standing image problems.
Yet, a recent report that analyzes the blockchain in the retail market it suggests big gains. The study projects the value of retail blockchains multiplied by 29 times in the next five years, from $ 80 million in 2018 to $ 2.3 billion by 2023. It seems an incredible leap; however, if one looks at the real value proposition behind blockchain technology, it is not surprising at all.
The decision makers in the retail sector are waking up to the blockchain value presents and all the different applications for the technology. The blockchain framework can help with anything from fraud detection to managing customer transaction data. Blockchain tools can even allow retailers and banks to make instant and error-free payment compensation.
As just one example, let's take a look at how blockchain technology could revolutionize supply chain management in the retail sector.
Blockchain and supply chain
Blockchain offers numerous benefits for retail supply chain management.
First of all, the implementation of a blockchain system can allow traceability. The trader has a complete range to follow a data path for each individual product on the journey from source to shelf. The blockchain guarantees security and compliance because you will always know where an object is and where it was. For example, if there is a defect in a product purchased from a supplier, the blockchain allows you to recall only the items involved, rather than withdraw thousands of fully functional units from the market.
A blockchain system can also make it easier to prevent counterfeit goods from affecting the market. Anything produced in a specialized or limited quantity can be authenticated easily, even once it makes its way into the reseller market. This prevents trademark infringement and helps protect brand reputation.
And of course, blockchain can also optimize inventory stock and track goods based on location. Retailers can have up-to-date information on which items are about to run out, which ones have been reordered and which ones are coming. The company can drastically reduce the amount of back product that ends up languishing on the shelves.
Even better, a blockchain can minimize those costly instances of stockouts. Stocks can cost the retail sector up to $ 1 trillion per yearand this does not even count for the negative impact on the customer's perception of the brand. Stores can have a more efficient and up-to-date inventory monitoring with a blockchain in place to manage inventory. No more errors or oversights.
Someone is already using Blockchain?
Yes, some dealers have used the new technology. For example, Walmart and IBM collaborated in a blockchain-based food traceability initiative at the beginning of this year. This system allows the retailer to identify the origin of food products almost instantly. Other elements can be traced, ensuring that their supply chain is free from trafficking in human beings and other abuses at work.
Walmart's decision to enter blockchain technology could be a gamechanger. The move makes a lot of sense, as part of the problem whenever there is a food safety problem is that it is so difficult to trace food from its point of origin.
Think about the explosion of E. coli in Roman lettuce detected last month. We knew that the vast majority of lettuce on the shelves of grocery stores and restaurant kitchens were completely fine. Regardless, companies had to throw out millions of pounds of lettuce across the country, and consumers did not have access to leafy greenery. After weeks of investigation, the FDA had been able to isolate the source of the incident in a large region of California from 6 December.
The situation could have been different if there was a blockchain system in place at the supplier level. Retailers like Walmart could immediately identify the affected product and remove it from the warehouse. Objects not influenced by E. coli could have been left on the shelf.
What's in Blockchain again?
As current applications of blockchain technology increase, more and more companies will see the benefits. When they do, they will want to get on board.
I expect to see the blockchain become a major force in the retail industry in the next decade; not only in supply chain management, but also in payments. In the end, the financial sector will not be able to deny the advantages of blockchain compared to its existing clearing house (ACH) structure.
It will require a significant initial investment, but the definition of the infrastructure for the new payment system will quickly repay.
