Blockchain technology may be used widely in the financial services industry, but that doesn’t necessarily mean it will see a smooth transition into the retail sector.
It certainly provides transparency among all parties, but the rapid speed with which eCommerce has accelerated processing payments may be an impeding factor to implementing blockchain technology in the retail space.
At the beginning of the year, blockchain was included on many lists of the technologies shaping 2017. How blockchain can potentially be implemented in retail is still up in the air. Because the cryptocurrency bitcoin isn’t in widespread use as of yet, it’s unlikely that blockchain technology will be put into practice.
The potential retail areas where blockchain technology could prove useful were shared in late 2016 and include transparency in tracking products, uncovering counterfeit goods, maintaining product warranties and managing trade promotions.
PYMNTS recently spoke with ACI Worldwide‘s VP and product line manager, Andreas Suma, on the topic of blockchain and its potential use in the payment processing commercial space.
“The challenge of blockchain today is that it’s not able to keep up with the high volume of payments that is necessary,” he said. “It will get there – but in terms of transactions per second, blockchain types of transactions are more of registration-based distributed ledger, which are much slower.”
The use of blockchain technology in retail is still in its early stages, with many companies like Cognizant conducting studies on how it affects the industry. Until now, there haven’t been retail use cases carried out or shared on the larger global stage. As such, it will be another five years before we see the beginnings of blockchain moving into any retail mainstream.
At the International Economic Forum this month in St. Petersburg, Russia, Denis Cherkasov, CEO of Sberbank Group and SBVC Asset Management, commented on the state of blockchain and its future potential.
“I think that few of us realized what the Internet would lead to 10 years ago, what kind of services we can (now) provide with the Internet,” he said. “And we have pretty much the same situation with the blockchain: We don’t know where it leads, and while we know its immediate benefits, it will take time to unlock its potential.”
This week in blockchain news, there have been positive signs for the advancement of the technology.
Delaware’s blockchain bill was introduced in May to legally recognize stock registries and business records if held on blockchain-based ledger systems. While this passed the Senate last week, there’s still the last step of both chambers of the legislature voting it forward for completion.
Blockchain use in the U.S. has not had much success, but the U.S. State Department’s newly announced research group focused on the technology is a possible first step in that direction.
The department shared the following statement on blockchain and its future plans: “Blockchain is not just for bitcoin. And it’s not just for the private sector. Nations and cities around the world are actively utilizing this technology to transform the work of government. This is happening now. And the Department of State cannot afford to wait to explore applications of this technology to the work of international development and diplomacy.”
One company that’s starting to move the blockchain ball is Walmart. The super store is hoping to patent a blockchain technology-based system to help track unmanned drone product deliveries. The official Walmart statement on this new development said, “In particular embodiments, a box delivered comprise the system delivery encryption comprising blockchain for the package authentication and tracking. The blockchain package tracking contains elements included, but location is not limited, customer and courier’s authentication, transition of supply chain, container’s ambient temperature, if available the product temperature, the acceptable thresholds for the product’s ambient temperature, package container system the products and the goods, or just a combination of it.”
This brings into question whether or not Walmart will soon start accepting cryptocurrency bitcoin as a new form of currency in its retail locations.
The likelihood of bitcoin and blockchain technology being used in retail seems to be a bit murky for the moment, but there may be potential within the next five to 10 years.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More