Are NFTs the future of e-commerce? How Blockchain can change the landscape of digital commerce.
In the last few years, the blockchain scene has been growing its list of disrupted industries at an incredible pace. If you remember, back in 2017 and 2018, we had the infamous initial coin offering upheaval. The following year, it was smart contracts that had all the hype.
Opening the door for innovation
Ethereum was established as one of the big players in the blockchain space by bringing smart contract functionality, and paving the way to what we now know as decentralized applications, or dApps. This gave anyone the power to create a dApp, getting rid of the need for traditional software development big-boys to get it done.
2020 was a big, big year of decentralized finance, also known as DeFi, which basically decentralized most financial services offered by traditional financial institutions. DeFi offers a wide-range of P2P transaction capabilities, including loans, staking, yield farming, betting and more. This was huge, the rise of DeFi brought a decentralized financial model and has now introduced a space in blockchain development for a whole pool of new innovations that will come in the future.
Non-fungible tokens means new kinds of transactions
Building on top of the breakthroughs of the last few years, non-fungible tokens (NFT) have matured enough to go through its own moment in the spotlight in 2021.
The concept of non-fungibility allows for a whole new way of thinking about transactions, with NFTs we are no longer limited to traditional monetary exchanges, we can now enjoy the exchange of assets, digital or physical ones.
Data about each transaction is also preserved for the parties involved, while the royalties generated by the “sale” of the asset are forever on the smart contract itself. Basically, NFTs can be the foundation of the next era of digital commerce: Decentralized commerce, or dCommerce.
The ERC-721 protocol came into existence a few years ago. Put simply, it is a standard interface for non-fungible tokens, or deeds. It is, however, important to understand how they operate and why they are so promising for e-commerce disruption.
Tech giants are becoming e-commerce kings
Although e-commerce revolutionized traditional physical commerce as we knew it, it also allowed the big players in the space to capitalize on online peer-to-peer commercial transactions by building it to their own advantage. A select number of tech companies quickly become e-commerce kings, controlling very large amounts of commercial transactions at a global level.
Amazon’s share of the e-commerce market accounted for almost 50% of all of US e-commerce retail sales last year. Founded a quarter of a century ago, platforms like Amazon have monopolized digital commerce and have been exploiting their dominant positions by exploiting consumer data and keeping all of the surplus value created by buyers and sellers.
As you are probably well aware of, there's been a frenzy around data protection in the last few years, changing the way that organizations in many industries’ can manage their users' data. Well, the e-commerce sector is not the exception.
Over the last couple of years, several projects built with blockchain have begun to attempt a disruption in the traditional e-commerce game, giving users the tools to offer decentralized alternatives to the current data management and transaction processes that have been set by the big-boys in digital commerce.
Even though first-layer dCommerce initiatives have begun to lay the foundations for an alternative that liberates users from the traditional e-commerce giants, many consumer needs (trust, decentralization, and data transparency) will still need to be addressed in a way that makes users that are not as tech savvy as early adopters of this kinds of solutions open to the possibility of not relaying on the traditional platforms for their digital purchases. Simply put, we are still a bit of a way off from a significant mass adoption of such services.
Next gen of dCommerce
The NFT space is now able to leverage the accomplishments of the crypto solutions that came before and paved the way. NFTs are ready to bring forward the new era of digital commerce.
With the use of NFTs we can eliminate e-commerce intermediaries. Buyers can now begin to enjoy a new era of P2P digital commerce. This new concept, a revolutionary one, an innovative one, will put the power back in the hands of buyers.
NFTs will also enable small and medium sized retailers to reclaim their place and could allow them to compete in a fairer way with the dominance of e-commerce giants, simply put it’s the beginning of democratizing and demonopolizing digital commerce.
It is up to the crypto leaders of our industry to act upon all of the possibilities that are available to us via this technology to push for balanced digital commerce. NFTs provide the infrastructure needed to disrupt the current need for human arbitrators, this allows us to begin to build solutions to buy and sell physical assets with NFTs.
Providing a protocol to allow the sale of physical, everyday products with NFTs with automated tokens will allow us to buy and sell anything, from appliances to Teslas, to your next home, as NFTs and on the way it might solve the issues associated with the exploitation of consumer data for the benefit of a few large organizations.
The DeFi space has shown us how necessary it might be to disrupt the existing way of providing financial services. Now adding NFTs to the equation allows for greater access to the goods provided by smaller retailers without anyone in the way.