The web is a giant, decentralized system for sharing information, but it has no standard way to handle money. Some companies want to change that by using the technology known as blockchain to make payments on the web easier and safer.
For now, most websites still rely on online payment services like PayPal or Stripe. These companies handle your credit card number and financial information and make sure the transaction goes through without a hitch. For instance, when you buy something online from Target, the retailer doesn’t actually handle your credit card number; that job is left to an outside company like PayPal or Visa.
Blockchain works differently. It’s a network of computers that allows people to send each other money anywhere in the world without having to go through a centralized bank or payment service. Instead, it relies on cryptography and a shared ledger of transactions to confirm each user’s identity and make sure no one can spend money they don’t have.
While bitcoin may have grabbed the headlines, it’s the blockchain technology that powers it that is the real innovation. This technology has the potential to disrupt many industries by making online transactions safer and more secure.
One of these industries is web payments: payments made by consumers on websites, applications and other digital properties. The ability to process these transactions reliably and securely has been a challenge for merchants and service providers since the earliest days of e-commerce.
The blockchain provides an attractive solution because it can enable processing of transactions directly between two parties in what are called “peer-to-peer” transactions, without using a middleman or third party. In this system, there is no central data server – all participants in the transaction have their own copy of the database. This eliminates a single point of failure and makes it almost impossible for hackers to compromise merchant databases as they do today.
The internet has increasingly become the place where people go to shop, share, and connect with the world. But even as more people are doing more online, payments on the web have largely remained stagnant over the past two decades.
In fact, for most people today, getting paid for selling their goods and services online is still a hassle. Most major payment services (PayPal, WeChat Pay, Stripe) require merchants to open accounts with them before they can start receiving payments from customers.
Merchants typically need to provide personal information such as bank account numbers and home addresses in order to qualify for these accounts. And in many cases, they need to wait days or weeks while the company reviews their information before they can even begin accepting payments.
And that’s not all. Because payment providers have so much control over merchant accounts, they can also make it difficult for merchants to cash out their earnings. Withdrawal fees are common, and these fees are often based on a percentage of total sales rather than a flat rate. The worst offenders will even withhold funds or shut down accounts without warning depending on how many transactions flow through them.
All of this is happening at a time when web payments should be easier than ever. After all, we’re living in an
E-commerce and subscription services are booming, but payments in this realm are still stuck in 1995. The blockchain enables the promise of web payments by enabling safe, secure, frictionless (and bank-free) transactions at low cost.
This is a big deal. Today’s payment systems are opaque and confusing. They lock content creators into partnerships with middlemen who take hefty fees. They leave customers vulnerable to fraud and identity theft. They make it hard for merchants to accept international payments or experiment with new business models. And they’re expensive for everyone involved.
The blockchain has the potential to change all that for the better, just like file sharing changed the music business or streaming changed video. The shift will be gradual, but once it reaches critical mass it will be irreversible — just as it was for Napster, YouTube and Netflix.
As someone who has spent over a decade in the payments industry, I’m fascinated by the emergence of bitcoin and blockchain technology. Payments are one of the most challenging problems to solve well, and the fact that there’s been so little innovation over the years is quite surprising. When you think about how much money moves through the global economy and how many intermediaries are involved in processing those transactions, it’s clear that there’s an opportunity for more efficient technologies to bring down costs for merchants and consumers alike.
At Shopify, we’ve been following these developments closely, and have been working on ways to make bitcoin payments more accessible for our merchants. Today, we’re excited to announce that we’ve partnered with Coinbase to enable bitcoin as a payment method for all Shopify merchants.
We chose Coinbase as our partner because they’re reliable and have a strong track record of protecting consumer data. As part of this partnership, we will be recommending Coinbase as our preferred bitcoin payment processor for all online shops integrated with Shopify. Over 75,000 online retailers use Shopify’s platform today, and this partnership gives them an easy way to accept bitcoins from their customers worldwide. We believe that bitcoin is a faster, cheaper, and more secure form of payment than credit cards or PayPal, which makes
In the past few months there has been a notable shift in the cryptocurrency community. There is now a greater focus on its practical use cases, especially as a payment solution.
People are realizing that cryptocurrencies have a variety of advantages over fiat currencies and they can be used to make payments online and in stores. One of the biggest benefits is that no third party or intermediary is needed to process transactions, which means it is cheaper compared to other payment methods. Cryptocurrencies are also borderless and digital, making them well suited for international payments without any middlemen involved. Another big benefit is that cryptocurrency transactions can’t be reversed, meaning merchants don’t have to worry about chargebacks from customers who claim they didn’t receive their products or services.
Blockchain technology also makes it possible for merchants to accept cryptocurrency payments directly from consumers without having to pay any fees to an intermediary like PayPal or Stripe. Instead of paying fees when accepting bitcoin payments for example, you can use an open source platform like OpenBazaar which does not charge any fees at all! The same goes with its other features too: decentralization means no central point of failure so there’s no chance your store will go down due to server problems or anything else.
The web has grown so much that some of the largest and most popular services are owned by a small number of companies. Think about it, Facebook, Google, and Amazon are all huge giants that own most of their respective markets.
The problem with this is that if a small group of companies control such an incredibly important part of our lives, we have to trust these companies, not just trust but also depend on them.
Dependency can be scary but we have no choice but to rely on the web. Our society relies on web services in almost every aspect from work to entertainment and even laws. If one of these huge companies were to be hacked or shut down for any reason imagine the impact that could have on our world.
To avoid being completely dependent on large monopolies on the internet people are finding ways to decentralize and distribute control back to us users. One way they are doing this is through decentralized apps or dApps using blockchain technology.