Regulating Blockchain by Law: Technical Application and Legal Supervision -Part 5

1.2 Supply chain finance

Trust is essential to the formation and development of modern commercial society. The trust mechanism promises supply chain finance a broad market prospect, but there are some inherent obstacles. Firstly, it is hard to ensure the data security and reliability of the supply chain platform; secondly, the credit of the core enterprises in the supply chain is difficult to transfer to multi-level suppliers, which easily makes companies in the dilemma of difficult and expensive financing; thirdly, supply chain finance itself has the problems of difficult control of risks and high credit operating costs. Building a supply chain finance platform through the blockchain not only solves some inherent problems, but also enables traditional supply chain finance to increase the credit of small and micro enterprises at the more end based on its own multi-point co-distributed ledger and other characteristics, helping upstream and downstream companies rely on core companies to gain the trust of banks.

As an innovative and forward-looking technology, the application of blockchain in the existing supply chain finance field is still at the basic stage. It is mainly committed to solving basic issues such as saving transaction costs, improving industry efficiency, and simplifying transaction operation procedures. The security in the application of supply chain finance, the encryption algorithms and credibility of data certification, and supervision mechanisms need to be further improved. Moreover, the application of blockchain in supply chain finance is not a panacea. Technology is a booster to better promote the establishment of a credit mechanism and open up both parties to the transaction. While relying on blockchain, supply chain finance must handle the trust and risk prevention and control of upstream and downstream enterprises.