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A Tutorial on Using Blockchain for Financial Transactions. Part 3. 

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As a top-notch provider of Magento development services, we are focusing on using the Blockchain technology with Magento in the last part of our long read.

Check out Part 1 and Part 2 if you still haven’t seen them.

Using Blockchain Technology with Magento 

What are some applications of blockchain technology in Magento-based online stores launched with the help of our Magento services? Let’s discuss them below.

  • Payments can be sent instantly from one wallet to another or facilitated via smart contracts. 
instant payments via blockchain
  • A discount card, along with other incentives and perks, is also something you can adopt. 
  • Customers have the option to reserve goods by using a smart contract. It allows buyers to pre-order products even if they are temporarily out of stock. In other words, a line of potential buyers is formed as the smart contract holds the customer’s money. Once the products are delivered, the retailer processes orders, ships the items, and withdraws money from the smart contract. 
  • Different kinds of auctions and contests can be organized. In comparison to, say, giveaways on social media, this will be quite open and honest. 
giveaways via blockchain
  • Authorization of users is made possible with the use of software wallets. So, instead of requiring a password, you may ask users to input their digital wallet and confirm their access to the site. To be clear, this only applies to digital wallets that work within a browser. 
  • In fact, you may even develop your very own wallets for your customers. You can save time by working with it because you won’t need to bother your customer with repeated confirmation requests. You can even do it yourself, but you’ll need to locate a safe spot on your server to keep the private key. 

However, this is merely a small sample of the many potential uses. There might be a lot more of them. 

For instance, retailers may collaborate and develop a shared bonus program utilizing token technology. So the customer can collect tokens, or incentives, at one organization and use them at another. That’s because tokens can also be kept in the user’s own wallet.

Blockchain payments: how to implement?

Let’s discuss some ways to implement Blockchain payments. Although we have only identified a few of them, there are many others. 

The first option is direct payment. What this means is that the seller verifies and accepts the order when the customer transfers money from their wallet to the seller’s wallet. 

The second is payment through a smart contract. Here, the client gets the products, and the payment is held in escrow by the smart contract. However, the payment is not immediately due to the seller and can be withdrawn at any time. 

implementing plockchain payments

This might be helpful when dealing with a certain vendor. As an illustration, let’s say that at your shop a laptop is sold for $1,000, whereas a supplier would charge you $900. However, instead of buying it, you put it up for sale. As a result, the customer deposits $1000 into the electronic contract. A smart contract may automatically pay out the net profit (say, $100) and send the remaining $900 to the supplier. 

Using a system that requires confirmation from the retailer is yet another application of blockchain technology. With a high turnover rate, it’s possible that the store’s stock levels aren’t always accurate, and you can find yourself short on supplies for some handmade items if you didn’t plan ahead. If the shop is able to fulfill the order, it will confirm it and temporarily freeze the customer’s funds.  

Finally, we would like to note the return of funds. In the blockchain, reversing a transaction requires creating a new block. If the customer has already deposited money to your wallet but you are unable to fulfill their purchase, you will need to initiate a new transaction and include the recipient’s address and the amount to be returned. A smart contract would make things easier to manage in this situation. You may avoid dealing with actual cash by focusing on order confirmations and updates instead. 

The advantages of Blockchain payments

Whenever money changes hands, it represents a sale or purchase of some kind. And there are two interested parties in this process. 

However, whereas in the market you pay cash and receive items, third-party intermediaries facilitate transactions between buyers and sellers online. While their presence should make things easier, there is also an increased potential for harm. 

When using a credit card, for instance, three entities are involved: the payment system, the bank, and a payment acceptance service. They communicate with one another during the exchange of money. The sale or purchase between the seller and the buyer will not go through if there is difficulty or a breakdown in communication. This means that the agreement is at risk if anything goes wrong that has nothing to do with you. 

Alternatively, you might use an online wallet; in this case, both you and the seller would need to establish an account there. At first glance, it would appear that the transaction was straightforward; the money was simply moved from one account to another inside the same system. However, you will be powerless to prevent the account from being blocked or hacked. 

All of this is due to the fact that they are centralized systems, and while they may employ backup servers and other security measures, these measures may prove ineffective against determined hackers. 

blockchain security

Another issue is that, as we’ve already covered, you can’t just get your hands on the money whenever you want. Everything is stored on a third-party service that can restrict access to it if necessary. 

On the other hand, blockchain operates differently. Here, each user may host their own payment node, thereby making their computer the central hub of the entire network. In addition, many of these nodes are spread out around the globe; they all coordinate in processing your transaction. Therefore, your transaction is safe from interference even if some of the nodes fail.