Whether it’s Twitter CEO Jack Dorsey selling his first tweet for an eye-watering $3.8 million, surging Bitcoin prices or booming new markets for Non-Fungible Token (NFT) digital collectibles, blockchain-related stories are rarely far from the news.
However, behind the style there’s plenty of substance. Today, blockchain is more than mere hype, it’s stepping out of the shadow of cryptos and establishing itself as an innovative and evolving technology that solves varied and unique industry problems.
While it’s still in its infancy compared to many other technologies, tangible new use cases are appearing every week, improving the way we live and work. But what is blockchain, how is it already changing the retail industry, and what is its long-term potential?
What is blockchain?
Blockchain is an incorruptible digital ledger used to record transactions. Traditionally financial transactions, which is how it rose to prominence powering cryptos, but today of almost anything digitally. It reached peak hype in 2017, but while the noise died down, behind the scenes the innovations blossomed, and the industry evolved beyond its traditional Bitcoin association.
In its simplest essence, it’s a peer-to-peer form of payment that removes the need for a third party like a bank. Through blockchain, there are no transaction fees, which reduces costs for both business and consumer alike. It’s the most prominent example of its existing use. In Brisbane, where I’m from, there’s a burgeoning tech scene and many local businesses, including cafes and my local IGA, accept Bitcoin payments.
Beyond payments, though, the technology already has numerous benefits, with a growing list including security, transparency and productivity; all crucial for the retail industry. As use cases increase and policymakers and industry figures take note, it could come to define innovation for decades to come.
Supply chain transparency
While it may sound like a technology of the future, its benefits are already being felt in the retail industry. Take supply chain transparency, for example. Conscious consumerism is surging, with shoppers increasingly influenced by how and where items are produced, under what working conditions, and whether materials are sustainable or ethically sourced. Many retailers can – and do – claim to be committed to honest and ethical practices, but without tangible proof, shoppers just have to trust their word.
Consider the production of a dress. It starts with a raw fibre that is farmed or produced, then processed, woven, and bleached or dyed. Then the fabric is tailored into a dress and shipped to a retailer. That entire process happens across different companies and countries, and through current methods it’s difficult to trace the chain and determine whether the materials are ethically sourced and sustainably produced, or whether the labour is exploitative or inhumane.
By keeping all records in a blockchain shared by retailers, manufacturers, suppliers, distributors etc., there is transparency and traceability. Through this decentralised ledger, records can’t be removed or altered, so through their trust in the blockchain, shoppers can trust the supply chain. This provides transparency in terms of ethicality, and as proof of provenance – or origin – which combats fake or counterfeit goods. And what’s more, by storing that data in a shared ledger, rather than in silos, blockchain can drastically increase productivity.
Blockchain also has extensive potential when it comes to experiential retail, a key component in the future of retail. Beyond transparency, customers also desire unique, meaningful and memorable experiences. In the United States, for example, The National Retail Federation ran Project NGAGE, showing how gamified digital objects on blockchain can ‘usher in a new era in retail marketing’.
The project released hundreds of virtual butterflies and branded digital objects, bringing a virtual treasure hunt to life. Using mobiles, attendees could catch butterflies on a map or in augmented reality, which were redeemable for real gifts at a blockchain booth. The appeal and influence of these shopping experiences is growing exponentially, and through blockchain the retail industry can deliver.
As shoppers come to demand greater transparency, flexibility and customer experience, blockchain represents a crucial and innovative foundation on which retailers can provide everything their customers need. While the crypto hype is unlikely to subside anytime soon, the blockchain engine room is where the real innovation and benefits can be found. It’s these practical applications that aren’t garnering the same attention but will be felt more greatly and for longer.
Lachlan Feeney is founder and CEO of blockchain startup Labrys.