Essay Sample on Blockchain

Blockchain is regarded as a breakthrough technology that offers massive benefits in many sectors. For instance, in the industry of construction, there have been most cases of withheld payments in tenders; thus with the technical design of Blockchain and introducing smart contracts this will assist mitigate such issues. Within this framework comprises blocking of funding of contract tenders until satisfaction upon contractual conditions is agreed. In smart contracts, it codes a set of conditions and instructions for instance of payments being automatically made when stated conditions are reached. It is a design that establishes a trustful chain of payments of the parties minimizing overruns on the time-cost. The primary paper objective will be to make a presentation of the detailed design of the Blockchain smart contract illustrating the featured structural layers and after that in this study examine a use case for bank guarantees in tenders submitted between contractors and companies.

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Introduction

Blockchain happens to be the foundation technology following Bitcoin and an increasing interest in recent years has been seen in this technology. The novel disruptive technology of Blockchain follows the art of solving codes referred to as cryptography. Blockchain technology introduction has since been of benefit to fields of finance, in this case, A Use Case for Bank guarantees in tenders between contractors and companies. The blockchain is a system decentralized existing amidst the permitted parties saving conflicts and time. The decentralized ledger also referred to as Blockchain contracts can be used for smart contracts. In this case, the contracts get a computer code conversion, later are stored, and replication on the system is done as the network of computers running the Blockchain are supervised resulting in a ledger response of either receiving or transferring the service or product.

Construction projects have since encountered delayed progress payment in arrangements of payment having contractors not work efficiently due to cash flow difficulties. Thus the design of the Blockchain smart contract for bank guarantees in tenders between contractors and companies will ensure a reduction in payment fraud following its distributed properties of smart contracts and inherited features. Smart contracts application for bank guarantees in tenders gives contract parties the ability to code clauses of the contract. In this case, all parties on the network tend to validate the output of each contract enhancing trust among contract parties. The case study will give insights into the key contributions of the proposed work, in this case, the design of the Blockchain smart contract. The case study further will explain on the current situation involving multiple pain points and the structural design layers to bring out the outline of Blockchain smart contract.

Key Contributions of Proposed Work

We propose a smart contract design methodology that enables the development of different use cases using Blockchain technology. Limited functions and operations are described in the example of the specific use, which provides particular contributions in the area of banks. The blockchain serves as a tool to develop bank guarantees and secure investment opportunities for optimal management of banking services development.

With this work, the smart contract provides a secure, distributed and shared decentralized ledger of all assets and transactions between companies and contractors.

The current situation involves multiple pain points

The current approach in managing and issuing a bank guarantee entails multiple pain points that can be significantly improved.

A written undertaking presented by the bank at the request of the customer.In which the bank guarantees the customer or any other party the direction of the beneficiary of the letter of guarantee within the specified amount mentioned in the guarantee letter in respect of a specific service provided by the beneficiary to the customer. The process is inefficient, consumes time and is expensive.

Tracking and reporting. Physical security issued must be stored securely and must be reported regularly where the process costs a lot of time and money.

It is difficult to make a verification of the validity of the bank guarantee - if the bank guarantee is forged.

Take many procedures to cancel the bank guarantee and need more time .

The external auditor can not know the number of guarantees and amounts that have been used or not or exist during the development of interest and non-interest. However, review to know amounts frozen in the guarantees and what guarantees that there are objections in a clear and easy, but need to save time and costs with the possibility of concealment of information about it directly or indirectly

It is challenging to create investment opportunities between the contractor, the company and the bank in the hope of benefiting from the guarantors in a project with low return and risk.

A blockchain based distributed ledger can address problems above through

1. tokenization of the bank guarantees
2. shared ledger
3. blockchain creates investment opportunities where the guarantor "bank" can invest the money held and the distribution of profits to the parties concerned "contractor" and "company" after the request for approval and take a percentage of the operation of funds.

Oxford blockchain strategy Key criteria:

1. YES. Bank guarantees have set common procedures that which is repeatable like between parties the physical issuance and exchanges, for instance, the beneficiary "Company," the Bank and the Contractor or Supplier. Automating eliminates the lengthy and time-consuming procedure as well as the physical disbursement of paper-based documents.
2. YES. Bank guarantees are a long-running transaction because each bank guarantee has at initiation transaction processes and finally sometime in the future at termination. Also, the process is unnecessarily long and consumes time.
3. YES. Bank guarantees presuppose many stakeholders. The stakeholders appertained in the value chain comprise the beneficiary "Company," Contractor or Supplier and the Bank.
4. YES. The bank plays the role of reconciling disparate data. The banker making the bank guarantee must reconcile information got from the Contractor or Supplier as well as the beneficiary to meet the requirement of the document.
5. YES. In this occasion, the value transfer entails monetary value as well as non-monetary value. The Contractor or Supplier and the bank will transact a monetary value specified by the bank guarantee, while the bank and the beneficiary "Company" will transact a future payment guarantee if certain conditions are met.
6. YES. Bank guarantees must be immutable for the beneficiary and Contractor to be protected.

Protocol layer

A public blockchain dominates higher levels of decentralization and immutability. Besides, private protocols are faster and scalable than open protocols. In our case, there is a need for a private implementation of the blockchain. The several transactions require privacy and security.

We will need a permission version and, which means that anyone using the blockchain will need permission to read information, transact and write new blocks on the chain. The Bank will control this permission formed to serve the blockchain.

A consortium of developer resources and other technical capabilities, including technological universities and the private sector, can be formed under the umbrella of the Bank to operate the system

Network layer

Trusted assignees will run the nodes ". The parties that need read access are the beneficiary "Company," Contractor for their guarantees, i.e. "A need-to-know basis Data." in the case of required adjustments that may occur at times the write access can remain with the bank. Also, the external auditor can give the read access for all the bank guarantees; the bank has Hyperledger provides the write access instructions or skyechain whereas technology integrations at the nodes are all specified, and to an extent, this is also, and the user has the capacity to define node behavior and transaction processing methodologies.

In a blockchain that's private, the resource requirements are much less than the public chains given the reduced conditions of consensus calculations.

The data storage requirements regarding network capability, archiving and regulation will be high since all transactions will be stored on the blockchain for a long time for the sake of traceability, transparency and knowledge building. The Bank will need to have an extensive data storage capacity as well. Application layer

The Bank uses the bank guarantees application, and also the beneficiary "Company" and Contractor or Supplier with the indirect such as external auditor and lawyer.

The user experience for each group must be designed at different access levels and a user interface that meets its ability to run apps as a platform for bank guarantees. The user interface should maintain the privacy of all aggregated data and only see aggregated data if relevant and required by each user where the contractor can submit a bank guarantee application stating the name of the company and the amount requested. The bank will then be able to offer the bank guarantee per the requirements or to include the comments that require approval from the contractor. The bank will then study the application for the amendment and issuance of the guarantee in the form. The platform also enables the external auditor to view all the guarantees in a professional manner that meets his requirements. Also, the platform allows for the creation of investment opportunities, namely, the possibility of taking advantage of the amount reserved in the bank guarantee of investment through the bank after the consent of the parties concerned.

Behavioral changes that should be implemented through the change management strategy will include issues such as using the interface to automate the process, retraining the interested bank staff and business people on the platform, and developing a video that demonstrates the platform usage mechanism for each user.

Bibliography

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