Retail goes to blockchain - FFC Media
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Retail goes to blockchain

Usability of cryptocurrency and blockchain in the retail business is expanding.

Nine years ago, Laszlo Hanets paid 10,000 bitcoins for two pizzas. A new era began: material goods began to be sold for digital money. And while retailers are still far from universal acceptance of bitcoins, globally, cryptocurrency is increasingly being accepted as payment for goods.

Major events in cryptoritelayl were announced at the conference Consensus 2019. For example, blockchain‐startup Flexa announced its partnership with a number of major US retailers. Payment application Flexa Spedn will allow users to pay for their purchases in more than a dozen stores of caliber Barnes & Noble, Office Depot and Whole Foods using cryptocurrency.

The use of cryptocurrency payments is gradually expanding. A global review of Kaspersky Lab, published in February of this year, showed that out of more than 12,000 respectable consumers in 22 countries, about 13% used cryptocurrency to pay for their purchases on the Internet.

Most popular payment methods

The volatility of digital money remains a major deterrent to large retailers. New intermediaries, such as Flexa, are ready to stand between the corporate business and the cryptocurrency market to take on some of the risks.

It seems that such a model could be a good way to attract large retail chains to use digital money in the next few years. For example, it is exactly as expected that the recently announced cryptocurrency partnership between Starbucks and FINTECH Bakkt will work.

Already, you can already spend digital money on travel, gift cards, jewelry, games and movies, relocation services, gadgets, household goods, and more. And the list will grow.

The blockchain’s ability to convey value and information will lead to more complex, multifunctional payment forms in the near future. The recently introduced Civic Pay application is a prime example: the solution will allow vending machine operators to track overdue items, and combine payment, identity verification and receipt of bonus points in a single transaction.

Loyalty programs

Another area of​retail business that can be optimized using the blockchain is loyalty programs.

These programs are the main tool for building long‐term customer relationships. Loyalty programs often have a less secure infrastructure than “real” payments, which provoke an increase in fraud. Unfortunately, the accumulated values​and personal data of the users of loyalty programs are stolen. In addition, many programs do not limit ways to spend earned «points.»

The use of blockchain helps retailers solve both problems. On the security side, it is much more difficult for hackers and fraudsters to enter a system based on a distributed registry than on a system that stores all data in a centralized database. A reward system based on tokens open to third‐party companies will provide customers with very diverse ways to spend their points.

This is exactly what American Express seeks to achieve with its platform based on Hyperledger rewards. This platform allows trading partners to create individual reward offers for clients of a financial corporation. The most famous player in this field is the Swiss firm Qiibee, which specializes in helping businesses use their loyalty programs.


Another family of blockchain retail usage scenarios is related to the ability of the technology to provide transparency and the ability to verify the origin of goods. The demand for such transparency is due to three key problems: security, authenticity and ethicality.

The US Centers for Disease Control and Prevention estimates that the federal government unit responsible for developing and protecting public health and safety annually 48 million people get sick, 128,000 are hospitalized and 3,000 die from foodborne illness. Outbreaks of diseases such as E. coli and Salmonella caused by poor products are not unexpected, and once contaminated products enter the large supply chain of a large retailer, it becomes difficult to track its origin in order to quickly eliminate the threat. It may take several days to determine the source, which can lead to large network losses and put clients at risk. Industry leaders are aware that recording on the blockchain every event on the production path, from farm to table, effectively solves such problems.

Logistics on the blockchain also increases the ability of stores to quickly identify and recall food. The IBM Food Trust initiative offers its members a blockchain‐based platform to track production at each stage of the supply chain, launched in the fall of 2016.

Testing the system began the American retail giant Walmart. Other American and global players in this field, such as Albertsons, Unilever, Nestlé and Carrefour, have also joined this club.

A conceptually different story is the need to verify the origin of products from an ethical point of view. Concern about the environmental and social responsibility of business is becoming an increasingly prominent factor in consumer behavior. Manufacturers are forced to respond to this need.

Again, tracking a product in an immutable registry and creating a user‐friendly interface allows customers to get a clear idea of​the product’s origin, and can be a powerful tool for companies to build trust and reward transparency in manufacturing and quality suppliers.

WWF, advocates the use of OpenSC — a tool for tracking the supply chain, built on the blockchain, it allows consumers to make an ethical choice when buying food. Customers receive information about the origin and life cycle of products using a QR code on the packaging.

The Ford Motor Company is testing an IBM‐built Hyperledger Fabric system that tracks the supply of cobalt material used in lithium‐ion batteries. The demand for this material has increased significantly due to the expansion of the electric vehicle market.

Most of the world’s cobalt is mined in the Democratic Republic of the Congo, where child labor is widespread and working conditions are slave‐like. Blockchain could provide western corporations with a guaranteed way to get cobalt from mines, where a certain level of production and labor protection is provided.

Finally, when it comes to luxury goods, the ability to establish the origin of a product is of paramount importance. The largest players in the diamond industry, such as ALROSA and De Beers, made blockchain‐based decisions to track gems from the mine to storage and to verify the purity of their origin, including previous ownership issues. Alyx luxury clothing brand will introduce Iota blockchain solution to demonstrate sustainable methods used at each stage of its supply chain.

Personal data management

Retailers regularly record, store and use huge amounts of customer personal data. Blockchain applications related to process optimization in this area are an extremely promising area. Taking advantage of the distributed registry technology provides customers with control over their data and creates new forms of marketing that will help retailers to more fully meet the needs of consumers.

With the help of the blockchain data exchange system, customers can inform sellers about their needs and preferences by sending them shopping lists in the form of smart contracts. In combination with the potential of the Internet of Things to outsource the execution and delivery of such orders to machines, the blockchain becomes the fundamental infrastructure for a new era of fully automated purchases.

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