Blockchain technology has been on a roll in terms of innovations and development. Starting from a distribution ledger designed as an alternative to a centralized payment network, blockchain technology has now become an integral part of day-to-day activities. From facilitating secure and anonymous global transactions to integrating into e-commerce, there is nothing that can’t be done with the help of digital assets.
Digital assets in Web3 is a broad term used to represent all the tokens that are built on and utilizes blockchain technology. From cryptocurrencies, stablecoins, and meme tokens, to NFTs, everything is considered a digital asset. Stablecoins are widely used as a means of transactions as they are relatively immune to volatility and can ensure quick and smooth transactions.
Moreover, stablecoins enable the transfer of funds from anywhere at any time globally. Thanks to this feature, several businesses are now integrating crypto payments to stay relevant and cater to the growing demand. In this article, we will talk about the future of e-commerce payments with digital assets.
The Rise of Digital Payment Methods in E-commerce
According to Statista’s prediction, in 2024 more and more businesses in e-commerce will start offering crypto payment services. While these predictions are highly subjective, it goes to prove that the future of e-commerce payments with digital assets seems an inevitable outcome. Moreover, according to the reports from research institutions, the number of businesses accepting cryptocurrencies as a payment method for their e-commerce branch has increased tremendously over the last decade.
The rise in new digital payment methods in e-commerce utilizing cryptocurrencies can be attributed to the accessibility and decentralized nature of cryptocurrencies. Additionally, anyone can make transactions using digital assets in seconds from anywhere around the globe, optimizing cross-border payments.
Moreover, cryptocurrencies and blockchain projects are known for their excellent utility and speed of innovation. For instance, AdLunam, an IDO launchpad, has designed a new Proof Of Attention consensus algorithm that allocates tokens from IDOs based on the community’s engagement with the project. For instance, a user can create social media content, engage with existing content of a project, and participate in different activities to collect points that will equate to token allocation.
This new mechanism from the crypto launchpad can be integrated into e-commerce websites to offer users rewards as tokens based on their activity and engagement with the project. These tokens can then be partially used to avail discounts on products, creating a win-win solution for the brand and the consumer. All of these features and more prove the inevitable amalgam of digital assets with e-commerce
Let’s take a deeper look at how the current payment methods can be streamlined using digital assets.
Digital Assets Payment vs Traditional Payment Methods
To understand the benefits of crypto and digital payments in e-commerce, it is first important to understand the differences between the two. Traditional payment methods have witnessed a significant transformation due to the latest developments. Banks and businesses have moved from cash and cheque payments to online contactless payments using QR codes and online transfers. These additions have had a significant impact in boosting the speed and security of transactions, yet they cannot keep up with services offered by digital asset payments.
Now it is important to understand here that even traditional payment methods are now digitalized using the local currency but digital asset payment represents payments using crypto and web3 assets. There are several core differences between digital asset payments and traditional payment methods. Let’s take a look at some of these differences.
1. Fiat vs Crypto
One of the core differences lies in the type of currencies used to make payments. While the traditional method relies on local currencies such as USD, INR, Euro, etc., digital assets utilize cryptocurrencies such as ETH, BTC, USDT, and more. This leads to cross-border complexity using traditional assets as they first need to be converted into the local currency, while cryptocurrencies are globally acceptable and don’t require conversion, saving money.
Also, one of the biggest USPs of cryptocurrencies is that they are decentralized digital assets and are not governed by any traditional financial institutions. There are no taxes to be paid on e-commerce purchases, the transactions are lightening fast, and secure. Additionally, all the transactions made using digital assets are stored on a blockchain network creating immutable records of transactions.
3. Transparency and Security
Tracking traditional payments can be tricky as it is complicated to follow the cash flow. However, all the transactions done using cryptocurrencies are already stored on the blockchain networks using hash. A hash on a block represents the transaction details such as the wallet address of the sender and receiver, the date and time of transactions, etc. All these details are encrypted to protect the security and anonymity of everyone involved.
While the centralized financial institution is not globally accessible, decentralized finance is readily available. Underprivileged countries have an especially difficult time accessing traditional financial services as they might not be able to open a bank account or even have access to a bank. Cryptocurrencies, on the other hand, are easily accessible and require the user access to the internet and a digital wallet to start transacting. Creating a digital wallet is extremely simple and just requires KYC verification to avoid fraud and verify the user’s identity.
These are some of the advantages of digital asset payments that suggest the inevitable integration of E-commerce with crypto. However, there are some shortcomings that needs to be addressed too.
The Volatility of Cryptocurrencies
One of the biggest risk factors when making digital asset payments is that the value of these assets can vary based on market conditions. Cryptocurrencies are highly volatile and their price can fluctuate depending on the market conditions like stocks. However, certain digital assets such as stablecoin are relatively unaffected by the price fluctuations.
There are several stablecoins in the market such as USDT, BUSD, etc., and these coins are generally pegged to a fiat currency or a real-world asset such as Gold. For instance, USDT is pegged to the USD, which helps stabilize the price of the token. Stablecoins are the most obvious choice for digital asset payments as their price are linked to the price of fiat assets, making them highly stable.
So the secret of the new era of digital asset payments for e-commerce lies in a balance between crypto assets and fiat assets. By utilizing both modes of payment, a new era of accessibility and usability can be ushered in.
The Modern Era of E-commerce Using Digital Assets Payments
Several brands have already accepted crypto payments for businesses and their E-commerce branches. Popular brands such as Microsoft, Overstock, Shopify, Newcheap, ExpressVPN, AMC Theatres, and more now accept digital asset payments and this number will only increase as crypto adoption increases.
Cryptocurrencies and digital assets are the future in this web3 space. As the regulations for using digital assets are being established, the stigma associated with decentralized finance will decrease, leading to global acceptance of digital asset payments. We are a part of the digital revolution and in a digital world, payments using digital assets are bound to foster.