As blockchain technology continues to gain momentum, more and more questions are being raised about its impact on our digital world. What is so important about blockchain? What can it be used for?
Today we will look at one example, taken from a speech delivered by Ruff COO Zhou Yan at the Global Blockchain Leadership Summit (GBLS). His speech, titled “Supply Chain Finance in the Blockchain Era”, looks at how small and medium-sized enterprises (SMEs) build credit mechanisms using blockchain technology.
The essence of supply chain finance is that core enterprises increase credit for upstream and downstream enterprises
In short, supply chain finance is a financing model for banks and other financial institutions to connect core companies with other upstream and downstream entities in the supply chain, enabling the delivery of flexible financial products and services. Today, supply chain finance relies heavily on these core companies to support and enhance the credit mechanisms for other upstream and downstream entities. This can create pain points for the smaller entities, which may not have access to credit and support from financial suppliers because their production data is incapable of credit enhancement.
Is small business really untrustworthy?
Small businesses are not inherently untrustworthy, but it is difficult to quantify and centrally verify their credit data. For example, it can take a substantial amount of effort to obtain and verify information such as productivity, operating rates, and inventory. So how can Ruff establish a credit mechanism for trustworthy small businesses? To answer this question, we need to look the value provided by efficient data management:
· Real-time operation of enterprises
Ruff monitors factory equipment operations in real-time and can accurately report on production status and efficiency in real-time as well.
· Verification of relevant upstream and downstream contracts
The intermediate layer is no longer obscured or delayed by contract verification.
· Multi-party reconciliation
Multi-party reconciliation is more efficient and convenient using a consistent ledger.
Blockchain is the best solution
So how can we achieve this level of data management? This is one challenge that blockchain technology is addressing head-on. Using Ruff Chain as an example, valuable data is recorded on the blockchain as sets of production and other data are extracted from the system. Once on the blockchain, this data can never be tampered with, and new data is added continuously in real-time. No human is involved in the process, as data storage, verification, and edge computing are all automatically completed on the blockchain itself. Thus, an open and autonomous blockchain ecosystem is formed, where small businesses have access to the data necessary to build their own credit mechanism during credit enhancement.
We need to acquire the data before it is uploaded to the blockchain. In the case of factory data, Ruff collects the information from physical devices using an intelligent gateway before it is added to the blockchain. There may be inconsistencies between various device protocols in the process, but the Ruff OS addresses these inconsistencies at the software layer, paving the way for credible interoperability between smart devices.
Supply chain finance is but one component of industry finance. Data issues have hindered the ability for small businesses in the supply chain to obtain credit and financial support. Fortunately, blockchain technology is working to solve issues through efficient data management. Blockchain increases the flexibility of supply chain finance, providing small businesses with credible data that no longer needs to be guaranteed by core companies. And this is only the beginning; there are many other application scenarios involving high-trust relationships between manufacturing enterprises where blockchain technology can solve issues. For example, data management between distributed PV power stations with shared charging and storage systems.