Blockchain-based Supply Chain Financial Services Using Smart Contract

Abstract

Supply chain finance (SCF), a proposal to address financing problems of small and medium enterprises (SMEs), aims to make working capital optimized by utilizing credit and transaction information through cooperation between upstream and downstream in the supply chain. But some demerits such as information asymmetry and the lack of trust in financing scenarios could still be witnessed in supply chain finance. Blockchain technology, with the characteristics of asymmetric encryption, decentralization, nonrepudiation, and conducting transactions without the supervision of a trusted third party, has revolved multiple stages of development. Smart contracts are regarded as an important derivative technology of blockchain, which are automatically executed by the code between multiple parties through the blockchain without relying on a trusted institution. In this paper, we propose a blockchain-based supply chain financial system combining smart contracts and main methods of supply chain financing to solve the disadvantages of SCF. We select three represented financing modes to design financing platforms with the introduction of smart contracts, and present our schemes in the form of specific pseudo code. All financing processes of supply chain are conducted on the basis of ethereum blockchain. This allows SMEs which have difficulty in capital turnover in the short term, or have insufficient credit to get financial loans more easily compared with traditional financing approaches due to merits of blockchain, and also this could facilitate supply chain to improve financing efficiency for SMEs.