Jeff Bezos founded Amazon.com in 1994. Today, it is the largest online retailer with sales of $47.72 billion dollars last year. It has been a long and winding road for Amazon, but it paid off and made his founder one of the richest people in the world.
Total retail sales globally amounted to $1.9 trillion dollars and this figure does not include peer to peer sales done through Facebook and other online outlets.
Conversely, as online transactions grow, the threat of hacking is also on the rise. The total amount of recorded credit card fraud worldwide is $5.55 billion dollars annually and that doesn’t even include intangible hacking damages from identity and data theft.
As Ecommerce continues to grow, security concerns widen and criminal attacks become more frequent and sophisticated. Companies like CyberSource, Authorize.net, and PayPal are trying their best to make the process as safe -or safer- than carrying physical currency.
Problems with PayPal
Paypal has positioned itself as the primary Ecommerce payment portal. Over the years there have been plenty of companies trying to compete in its niche and none have been able to come close to its popularity.
This is not due to an inferior product or technology, but rather the widespread acceptance of PayPal. It doesn’t make sense to add payment options that people don’t use. In particular, those using Shopify to sell online rely massively on them.
They are well aware of their dominance in online commerce… in spite of being a service for safety and convenience, it provides subpar customer service. A simple web search will show thousands of cases where users have received a very unsatisfactory kind of support.
It is especially harsh against business owners. Paypal hides behind its lawyers and “Terms of Service” to enforce their will. Over time, reputation has gone from bad to worse. Unfortunately, it is already deeply rooted in modern e-commerce and banking, no other service comes close.
Bitcoin and Cryptocurrencies
Cryptocurrencies were created to address the problem PayPal claims to solve. Bitcoin in particular is a decentralized payment system outside the jurisdiction of any country or company.
Founded and released in 2009, it also took a while to gain worldwide acceptance. Upon its release, people were skeptical because a Bitcoin, in essence, is worthless. BTC is a whole decentralized effort and it doesn’t have a legal tender.
Nevertheless, people bought, sold, and traded Bitcoin trough a series of ups and downs in its value. The concept and technology spurned dozens of copycats including Etherium (ETH). Etherium tried to take it a step further by having a perceived value out of the box. It can be used to buy “contracts” or in layman’s terms “computing power of the Etherium network”.
It took years, but steadily people accepted and used these electronic coins. Things changed on July 24, 2017, when Delaware signed into Law an amendment to its Stock Corporation Law. The Blockchain Bill allowed corporations to store “assets” in electronic form. The asset can be recorded and reported as part of their corporate balance sheet. It effectively allowed financial institutions (many of them related to Ecommerce) to acquire cryptocurrencies.
From prior to this law, a company (for tax purposes) has to record all its transactions. That has not changed. However, a company buying any cryptocurrency will have an accounting problem. Accounting rules of double-journal entry state that for every transaction, an asset or service of equal value must also recorded. Prior to this law, this sort of online currency was neither an asset nor a service. That changed with the signing of the Blockchain bill. It officially recognizes cryptocurrency as an asset, effectively allowing corporate entities to buy and sell them.
Bitcoin trade value jumped from mid-2000’s USD to as high as $16,000 per BTC. As of this writing, the BTC trade value to a US Dollar is in the $12,000 range.
Using BTC as an alternative payment
After this, websites and mobile applications to store, manage, and convert cryptocurrencies popped up like daisies.
Applications to trade BTC and the likes are passed through the PGP technology. It is a secure encryption system developed in 1991. Since PGP keys are complicated to the human eye, the QR code program is used on top of it. Together they can transfer large amounts of BTC to any entity with a BTC wallet.
BTC is now used as a remittance system. It is also a popular “world” currency in the dark web. Mainstream acceptance is starting to see the light. The significant investment made by financial institutions in BTC means to many an assurance of its “worthiness” as an asset for the foreseeable future.
Despite the system and framework being secure due to the transparency of the transactions, individual wallets are still prone to user negligence. Unfortunately, there is no solution to that.
Applications that allow BTC to be withdrawn as real-world cash are now widespread and reputable. It is about time that mainstream Eommerce adopts it as a payment method.
You have an online store? Here are some tips on how to keep it secure.