E-commerce

Purchasing an iPhone

Suppose a user purchases an iPhone from Harvey Norman, an online retailer, using the blockchain. The input of the transaction will be a type of currency; the output, in this case, might be five tokens:

  • a shipping token, which can be used to redeem the product from a local pick-up station.
  • a warranty token, issued by Apple, which allows the iPhone to be serviced in shops other than Harvey Norman (e.g. Apple Centre).
  • a receipt token, issued by Harvey Norman, which allows the product to be returned in 90 days. It's also useful for getting a Tourism Tax Refund if you want to take the phone out of Australia.
  • a login token which gives access to Apple's App Store, iTunes and so on.
  • an ownership token representing the ownership of the iPhone

If without tokens as the integration anchor, the three different services might be carried out by various means. With tokens, the buyer doesn't need to store papers, order id numbers, links and so on. All he needs is the seed of his wallet and the TokenScript file for the iPhone purchase. Even in case he loses his wallet, he can easily restore all he needs.

Such a model can also make it much easier to interact with tax authorities, for example if the buyers wants to claim an input tax deduction. To prove it, he only has to give the tax authority his address. If the input tax deduction covers several purchases, he could give the financial authority his xpub key, and the tax authority can check the key against all claimed purchases in seconds without further proof.

**[[Big advantage: Without you have a lot of papers and so on which you need to store. With it, you have it all in your wallet and can recover it always with your seed. --> and, woah, you could use your xpub key to prove your tax refund]]

The Shipping Token

Without it, a user might get a tracking number instead of a token, which itself carries no authentication information, so it can't be used to pick up the product unless a pickup code is provided, perhaps in SMS - even more poorly integrated with the process.

With the use of a shipping token, the token status can be remotely updated by the shipping company, even messaging to users to inform an upcoming delivery (if the token is held in a mobile wallet). With a bit of cryptography, it's easy to authorise someone else to pick up a product.

Warranty Token

Without this token, a user might need the serial number and an online registration process to activate the warranty. She might even need to create an account for that, whose password she will probably soon forget.

With the use of a warranty token, the terms and expiration would be easy to find, as it is token properties. The user can log in to the warranty service website with the token, forgoing an account. The token can be programmed to receive messages like product call back or emergency security updates.

Receipt Token

Lacking a reliable way to authenticate the purchase, an online purchased product usually cannot be returned to the store but might be returned via online means such as a postback. A token carries the methods for authentication sufficient for the process to be done in store.

Despite such a token not being transferable or authorised, it is still useful for 3rd party integrations. The Tax office will be satisfied that the receipt can't be faked without collaboration from the seller, and allows a swift and easy tax-refund process. If the phone is purchased for work, the employee can easily reclaim the expense from an employer with the trust implied.

The Login Token

This token can be used to login to an account for Apple's App Store or iTunes shop. It could also be used to synchronize several Apple devices.

The ownership Token

This token could be needed to use any other token. If the iPhone is sold, the ownership token is transfered too, and the old owner will not be able to login to the account of the new owner. There can also be a mechanism to delete the account history when the ownership token is transfered.

Purchase with one token, getting three tokens. They can be used to access services, like delivery and repair.

As we can observe by the use of tokens, usually scattered business processes and web experiences can finally be integrated. This ties closely to the other benefit of the blockchain: a frictionless market. In this example:

  • When the phone traded is second hand, it would be easy to pass the warranty to the next user through a token transfer, opening the market further.
  • Since shipping can be tokenised, it would be easy for the buyer to choose his favourite shipping company without having to supply it with business context (address, product, weight, dates) manually, further opening the market for competition. This is illustrated below.

Purchase with a payment token and a shipping token. Notice that shipping token is supplied by the user, which we assume the user purchased in bulk before, in order to let market work to her advantage.

This example can be further extended to solve complicated and innovative business cases. Suppose the purchase is not made with fiat currency but with American Express points. The iPhone purchase will be insured for screen damage, and as a result, the transaction will also have an insurance token as the output.

When the mobile phone is repaired for screen damage, an invoice is issued concerning the purchase record of the phone to prove it is the same phone purchased with the points, enabling the insurance to be paid on the spot.

Without such tokens, the user will have to submit a billing statement, invoice and evidence of repair in order to submit a claim. Many users will surely miss one of those documents; the claim may take a few days, and still be prone to fraud.

In this insurance case, the blockchain allows business process innovation that otherwise would require the user to sacrifice convenience, for the mere fact that too many parties are involved and there lacks an integration anchor.