Applying Blockchain Layer2 Technology to Mass E-Commerce

Abstract

The emergence of e-commerce has changed the way people trade. However, merchants are charged high fees for their use of the platform and for payment services. These costs are passed on to customers in the form of higher prices. Blockchain technology can provide lower transaction fees with high security and privacy level but is incapable of delivering the number of transactions per second demanded by real e-commerce. Establishing a layer above the blockchain to manage transactions which we called Blockchain Layer2 technology, has the potential to solve these issues. In this article, we focus on the effect that layer2 technology can provide in reducing fee costs and improving transaction volumes. We introduce the problems that the e-commerce industry is facing currently and how blockchain layer2 technology can help to address these issues. We list and describe the main layer2 mechanisms based on the Bitcoin and Ethereum blockchains. We discuss issues that arise when applying layer 2 technology to e-commerce. We analyse the costs associated with difference e-commerce payment network topologies and investigate the funds-capacity needed to support high levels of value transfer.