The retail market has experienced an unbalanced growth rate when it comes to blockchain adoption. Though, recent times have witnessed a need in the way retail sectors work. Cryptocurrency offers considerable potential applications that can benefit the retail industry in the long run. Blockchain technology has the ability to transform industries and provide them with a path of development and success in order to meet long term goals effectively.
This needed shift in retail firms is an essential part of a big-scale digital transformation, prompting expectations of price transparency, relevance, and amenity. However, retailers or even investors might be a little nervous about adopting blockchain technology due to the fluctuating market behaviour of cryptocurrency today. The highly volatile asset is capable of yielding profitable results however can somewhere result in significant losses too. A retailer must understand every aspect of the mining of bitcoin is still possible and profitable along with blockchain technology in order to market well and deal with the challenges the advancement could bring.
THE POSITIVE IMPACT OF CRYPTO ON THE RETAIL INDUSTRY
- SMOOTH CURRENCY FLOW
For a fact, cryptocurrency is a decentralised system based on community guidelines. Conventional payment methods such as Visa and MasterCard are regulated highly as they are controlled by authorities. Well, that’s not the case with crypto. No government or central authority controls cryptocurrency hence making it completely liberated. This promotes a free retail trading atmosphere through multiple nodes on a network that validates every transaction made in the sector.
- LOWER TRANSACTION CHARGES
Cryptocurrency does not deal with third party access and can effectively reduce the issue of high transaction fees for retail investors. With a minimum transaction charge, blockchain technology enables retail participants to choose a considerable payment fee for fast transactions. However, these charges depend completely on how urgent the specific payment is. Moreover crypto offers a minimal transaction fee to the retail sector no matter how big the transaction is.
- MONITORING PRODUCT QUALITY
Another positive impact on the retail sector cryptocurrency can bring, is maintaining product quality. Crypto implications can be used for tracking a product, its address, conditions etc. For example, Perishable goods can be surveyed through internet-enabled detectors that can record the temperature data on a digital register. Any defective or broken product can be detected by the technology by accessing blockchain history in order to track the product back through the supply chain. Quality supervision allows retailers to recall products and rectify the supply chain concerns.
- REGULATING ADMINISTRATION
From the administration side, retailers back offices can use smart contracts enabled payments on the completion of a project. The technology rationalises the administrative process in the retail sector. Heavy data admin tasks such as payroll administration can be easily digitalized and tracked in real-time, so one can focus more on the creative value-added work for the industry.
THE NEGATIVE IMPACT OF CRYPTO ON THE RETAIL INDUSTRY
Crypto’s volatile nature discourages investors and retailers from investing in it and operating the application. Back in March 2020, bitcoin’s value decreased by a rate of 31.5% which affected major industries at the time. For example, BitMex had to shut down temporarily due to the loss, and for stabilising the coin’s value, trading was stopped. The price flux can affect the retail sector miserably, blocking all their major operations temporarily.
- DIFFERED NATURE OF MARKET
There is a possibility of an imbalanced environment for investors, spending more on the resource to purchase bitcoin instead of selling it. Various firms and retailers buy bitcoins at a massive rate which makes trading the coin difficult in the long run. Hence, to help investors maximize their profits, exchanges had to leverage other marketers.
Cryptocurrency allows retailers to process an advanced form of payment method, lowers the transaction fees and guarantees a smooth flow of currency, however with this comes risk and the unwillingness to invest in crypto. The reason being the highly volatile nature of cryptocurrency. Volatility discourages major retail participants to adopt the technology as they fear it might result in a major loss. As a matter of fact, cryptocurrency applications include both the negative and positive sides, which one needs to scrutinise before digging into the world of crypto and retail.