Blockchain-based risk mitigation for invoice financing

Abstract

The market for invoice financing has been steadily growing in the last few years and has been the third financing market in size in 2016. Most solutions in this field are based on private platforms and even the new proposals based on blockchain are mostly adopting a private, permissioned blockchain. In this paper, we propose an idea based on a public blockchain that allows both fully open and group-restricted auctioning of invoices. Furthermore, our proposal introduces a reputation system that is based on the past behavior of entities, as it is photographed by the public blockchain, to allow insurance companies modulate the cost of the insurance contracts they offer. This combination guarantees the complete transparency and tamperproof-ness of a public blockchain, while it allows reducing insurance costs and fraud possibilities.