Hiveterminal: Why Use Blockchain Technology?

In 2017, Hiveterminal set its sights on an ambitious project: to bring invoice financing to small and medium-sized businesses (SMEs) via a digital, blockchain-based platform. After a successful crowdfunding campaign, the platform was launched in November 2018. To date, the platform has enabled SMEs to acquire some EUR 700,000 in liquidity on our test market, Slovenia.

Hiveterminal’s success in providing fast and cheap liquidity to SMEs in need cannot be attributed solely to the technology choices we have made. Instead, our technology choices and business model combined have enabled us to gain traction among both invoice buyers and sellers.

However, many still wonder why we chose to utilize blockchain technology to power our platform? So, we decided to write a blog post about it.

Immutability of Data is an Advantage
Blockchain technology enables the maintenance of a continuously growing list of records, called blocks, which are secure from tampering and revision. Each block contains a timestamp and a link to a previous block. Blockchains are inherently resistant to data modification — once recorded, the data in a block cannot be amended retroactively. The immutability of data is perfect for financial use cases, including invoice financing.

For Hiveterminal users, this means that all invoices uploaded to the platform, debtor confirmation of validity and, ultimately, invoice purchasing are all stored as an immutable, time-stamped record.

Furthermore, due to the way records are linked to one another, blockchain-based systems have a strong audit trail, enabling regulatory bodies and auditors to review invoice sales, confirmations and assignments to the new owner easily.

Digitalization and Automation to Serve SMEs
Digitizing and automating many non-digital processes is what has allowed Hiveterminal to offer its services to invoice sellers completely free of charge. By marrying blockchain technology to real-time digital streams of financial data, Hiveterminal can calculate the maximum funding amount for an individual invoice on the platform instantly, before the SME even commits to selling the invoice.

Fraud Prevention at the Core
Since the invoice itself is tokenized inside of Hiveterminal’s system, double selling and spending are prevented by default inside the blockchain-based system. This allows us to easily prevent invoice sellers and buyers from maliciously using the platform.

Decentralized Proof of Invoice Ownership
Our decentralized proof of ownership DApp allows invoice buyers to access proof of invoice purchases directly on the public Ethereum blockchain. If we used traditional technology solutions, the invoice buyer would have to trust the platform that his previous purchase record would remain stored online or been altered.

Even if Hiveterminal becomes temporarily inaccessible or shuts down completely (which it won’t), the invoice buyer would still be able to access all necessary invoice details in his or her portfolio.

Transparency in a Trustless Ecosystem
Blockchain has transparency baked into its core, and Hiveterminal as a company embraces it. All records of invoices purchased are published to the public Ethereum blockchain for anyone interested, and that fuels our community members to create interesting projects. One great example of such development is SoldOnHive, which was developed by a community member. The team finds it a great addition to the Hiveterminal ecosystem, so we supply him with additional financial data on a monthly basis.

Endless Possibilities Ahead
We can create new fraud prevention mechanisms, utilize smart contracts as an automated way to confirm and/or purchase invoices, and offer many additional services, like the creation of a financing risk score for an individual company. That is why we are confident that choosing blockchain as the backbone of the platform has been a wise and future-proof choice.

In 2017, Capgemini Consulting predicted the mainstream adoption of the blockchain and smart contracts across a variety of industries could happen as soon as 2020. Some even suggest that the invoice in its traditional form could be replaced entirely by tokenized counterparts. Just at the beginning of this month, the Chinese company Tencent and WeChat Pay announced its cooperation with the Shenzhen Tax Bureau on rolling out its blockchain-based electronic invoicing project, following up on the Shenzen 2019 pilot, where 10 million blockchain-based invoices were issued by 7,600 companies using the system.

We hope you are as excited about the future as we are.

Stay home, stay safe, stay tuned.