Autonomous Invoice Discounting On The Ethereum Blockchain…
Fundamentally, the blockchain technology provides the storage of and access to information in a shared or distributed ledger like a distributed database, without being vulnerable to manipulation by actors of bad character and intentions, even if used in a non-trustworthy medium (such as the internet).
This technology enables parties who would not ordinarily trust each other to come to a consensus by means of the shared ledger, providing each party with a single and shared source of truth.
The shared ledger is maintained by a decentralised network of computers (participants), that must all validate an action or transaction before it is appended to a chain of transaction groups (also known as ‘blocks’) that is corruption-free as it is replicated across the network and difficult to destroy. This is because blocks are uniquely linked to each prior block (blockchain, i.e. group of approved blocks).
With the Populous World invoice discounting platform taking advantage of these technology advancements offered by the blockchain, invoices are tamper-proof once created on the blockchain after a rigorous KYC process. This prevents fraud, invoice manipulation and provides a sense of assurance for invoice buyers who are able to participate in the invoice financing process regardless of geographical location, thanks to blockchain technology.
Furthermore, the use of smart contracts allows statutory stipulations to be embedded in computer code, which enables the automatic execution of functions defined by a legal contract.
The invoice discounting smart contract also grants the protection against duplicate invoice discounting, as the contract will not allow the clone of a financed invoice to be further financed. These features cannot always be guaranteed in a centralised environment outside of the blockchain.
A smart contract, therefore, acts as an application layer that is built on the Ethereum blockchain. Other smart contract benefits include cost reduction and faster transaction times as no third party is required in the invoice discounting process. Invoice buyers and sellers are directly linked and the smart contracts immediately disburse funds once confirmation is received that the invoice crowd sale has been concluded, and will autonomously pay invoice buyers once the invoice has been settled.
Dr. Nemitari Ajienka, Ph.D — Populous World
