Trakti Smart "Legal" Contracts Blog

Uniqueness and conformity checks in blockchain

on May 24, 2021

The adoption of smart contracts has the potential to connect buyers and sellers on a whole new level. The uniqueness and conformity checks in blockchain can enhance payment capabilities and  innovate O2C and P2P processes.

Blockchain technology is just starting to gain traction in revolutionizing many business implementations in the supply chain, payment, digital asset, and identity management. In addition to the decentralization it introduces, the uniqueness and conformity checks in blockchain are a real game-changer when it comes to electronic document distribution. 

The uniqueness and conformity checks in blockchain

But why are the uniqueness and conformity checks in blockchain important? Simple. Blockchain confirmations are vital since they are a way of verifying and legitimizing information that will then become immutable. If a transaction is deemed fraudulent, it is rejected from the blockchain: zero blockchain confirmations means zero transactions. 

You probably already know that Bitcoin’s blockchain creates a new block about every 10 minutes through the mining process. This block then verifies and records new transactions and appends them to the Bitcoin blockchain. This means that a transaction is unconfirmed until the new block is generated. Therefore, if you’re sending or receiving Bitcoin, it’s essential to wait until you see that the transaction has been confirmed. 

This mechanism is what fuels one of the implementations of blockchain in order-to-cash (O2C) and procure-to-pay (P2P). The nature of the ledger allows for purchase orders and associated invoices to be replaced with a smart contract that fully automates the transaction and streamlines the payment. Since smart contracts, run as self-contained programs, have become the most modern manifestation of these contractual agreements, they can deliver on contractual obligations when the necessary conditions are met

In the B2B world, this level of automation along with the immutable nature of the ledger means that details of transactions are securely stored and are accessible only to the authorized parties (buyer and seller). Thus, in turn, increases trust, thereby reducing collection disputes – leading to greater opportunities for automation. B2B transactions benefit from the implementation of blockchain in a myriad of ways. The strong transactional audit trail helps reduce fraud and cyber-attacks while streamlining, accelerating and automating transactional processes. 

And central to this quality are the smart contracts with their wide-ranging impact on both O2C and P2P cycles. A smart contract contains all the terms, including what needs to be delivered, how and when, and on what payment terms. Because terms are coded in a computer program, the payment execution can be fully automated, removing a lot of transactions and manual interactions.  

There are many ways in which blockchain technology can deliver automation and lower dispute management, through integration with the growing population of cloud-connected devices. From tracking the origin of goods to the conditions in which they were stored and ensuring payment to suppliers is executed – blockchain has the potential to provide even further value.  

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