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Why is decentralization important in the e-commerce industry?

By Ertix Truepatch
Published in Blog
January 13, 2024
5 min read
Why is decentralization important in the e-commerce industry?

Today’s generation can only think about one thing when they hear about e-commerce, and that’s the path Amazon began in the 90s, especially the quantum leap that the company managed to make in the early stages of the 2000s… It’s understandable, since the project that was initially known as “Cadabra”, a small online book store, would end up becoming a monster that offers a huge number of products and services, with great influence in multiple regions of the world and capable of generating billions of dollars.

However, e-commerce didn’t start with Amazon, and its origins should not be solely tied to the advent of the Internet. The roots of e-commerce can be traced back to the early 20th century in the United States, particularly in the 1920s and 1930s, with the emergence of catalog sales, something previously unimaginable. This trend continued in the 1950s with the widespread popularity of telephone shopping, and then, with telesales, it gained even more prominence. The Internet represents the final step in a long journey that has been greatly shaped by human action. Indeed, human action serves as the driving force of progress in our societies, a dynamic and spontaneous process where millions of people collaborate to make discoveries and solve problems.

When there’s freedom, human action thrives, allowing people to achieve remarkable feats. This process is so potent that it can even find ways around restrictions on freedom. This is where the decentralization process plays a crucial role. It’s a complex process that involves significant internal changes and improved services. Decentralization is vital for planning and addressing new challenges, particularly in finance and administration. In these times, decentralization is essential for giving a significant boost to the e-commerce industry.

Decentralization as a new engine of the e-commerce industry

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We come from talking about human action and what it’s capable of doing, especially when it develops very freely since the free will of the individual must function as a link between finance, the e-commerce industry, and decentralization. First, it’s necessary to talk about decentralized finance (DeFi), a field that has had sustained growth in recent years.

In these difficult economic times, including the post-pandemic era, cryptocurrencies continue to gain significant ground, not only in developing but also in many developed countries. Politicians’ efforts to hinder this growth have proven to be as futile as trying to stop the rain with their hands. Increasingly, investors and everyday people are looking to transact within a framework of privacy and decentralization, which is where DeFi protocols come into play.

The concept is to remove intermediaries from financial transactions, offering an alternative to the traditional system where numerous middlemen charge fees to facilitate the transfer of money between parties. It’s quite simple to grasp. For instance, when you purchase a bicycle with your credit card, the process involves the merchant sending the card information to the acquiring bank, which then forwards it to the credit card network. The network subsequently seeks payment authorization from the issuing bank, and ultimately, the issuing bank sends the approval to the network via the acquiring bank. Each step along the way involves fees for their services.

Quoting Francisco Landino, Blockchain director at Lemon Cash (a platform widely used in Argentina, a country with an immense crypto community):

“DeFi protocols constitute a decentralized system that allows anyone to access thousands of financial applications, regardless of who they are or where they are, without depending on intermediaries and without the need to give up control of their money to a third party.”

This is the key to this matter: the possibility that financial operations are not executed by a person or a company. Here smart contracts come to light, which are programs stored in a Blockchain. These contracts guarantee autonomy and decentralization, leaving a record that doesn’t compromise the identity of any of the parties involved.

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How do smart contracts work? Let’s break it down. It’s important to note that the concept of smart contracts was introduced by the Ethereum network. These are statements that get executed based on code logic within a blockchain. Smart contracts have various applications, from issuing electronic tickets to facilitating financial transactions, all while ensuring speed, accuracy, and, of course, security, as blockchain operations are highly resistant to hacking. A report from the Alchemy platform revealed that around 4.6 million smart contracts were in use on the Ethereum network as of 2022. This evidence underscores how smart contracts benefit many industries, including DeFi finance, where stablecoins play a crucial role—these are assets used to hedge against crypto market volatility.

At this point, it’s already possible to imagine ordinary people and entrepreneurs enjoying online shopping and shaping their businesses, taking advantage of anonymity, decentralization, and security. The presentation and validation of documents are not necessary to participate in the new digital economy. When it comes to decentralized finance, anyone with an internet connection can see what’s being done. This is the difference with centralized agents, which are characterized by establishing a wide range of conditions of use and complying with KYC (“Know Your Customer”) regulations, which require customers to identify themselves using certificates such as passports or national ID documents.

A wide variety of products, the presence of multiple suppliers, a simple way to follow all customer reviews… all this is possible in a decentralized e-commerce. It ensures better protection for user data compared to traditional e-commerce, which often faces scams. Additionally, a decentralized platform is more resilient against shutdowns and penalties. However, it’s essential not to misunderstand: we’re not suggesting that the principles of decentralized e-commerce exclude human interaction. Some challenges require direct communication with customers, such as resolving issues like incorrect product deliveries or warranty claims. While this can be technically and economically challenging, it’s possible to offer a diverse range of products and services while still adhering to decentralization principles and maintaining an efficient customer service system.

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A bright future

It’s challenging to express how much e-commerce has expanded in recent years; it’s become an integral part of our daily lives. The world of blockchain and the crypto industry is no exception. Cryptocurrencies are reaching regions with a strong desire for financial freedom, where trust in traditional banking institutions and government leaders is quite low (Latin America serves as a prime example of this trend). People in these areas are seeking ways to gain financial independence. This is where decentralization comes into play. The demand for e-commerce remains high, and the traditional industry, despite its evolution, still has room for improvement. At the same time, DeFi tools continue to evolve.

Historical background of e-commerce, human action, decentralization, DeFi protocols, and smart contracts… that path brought us here. However, we understand that you’re looking for alternatives. That’s why we want to introduce you to LOAD, a protocol on which we have been working diligently. We envision it as the future of e-commerce, a platform that embodies the principles we’ve discussed. Our goal is to offer sellers and buyers new incentive mechanisms, enhanced security and privacy, and the ability to engage in cryptocurrency transactions using L2 Optimism, a layer 2 Blockchain built on Ethereum. We aim to foster the emergence of both global and local markets through LOAD’s open-source protocol. Sellers will need to stake LOAD tokens to join the platform, while buyers can earn rewards in this token for their purchases. Owners can store their LOAD in an Ethereum Virtual Machine (EVM) compatible wallet like MetaMask. It’s a community-governed ecosystem and an ideal space for conducting business. Stay tuned for upcoming news.


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e-commercedecentralizationamazoncryptocurrenciesdefiblockchaincryptocurrencyanonymitysecurityonlineshoppingdigitaleconomykycprotectionloadethereummetamask

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