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Conditional Token: A New Model to Supply Chain Finance by Using Smart Contract in Public Blockchain

Conditional Token: A New Model to Supply Chain Finance by Using Smart Contract in Public Blockchain

Authors :
Che-Pin Chen
Kai-Wen Huang
Yung-Chi Kuo
Source :
FinTech, Vol 2, Iss 1, Pp 170-204 (2023)
Publication Year :
2023
Publisher :
MDPI AG, 2023.

Abstract

This paper defines Conditional Token (CT) as the token with specific conditions and proposes the use functions for its operations in smart contract so that it can be deployed at the public blockchain. If CTs were exchanged to/equivalent to fiat currency once then all conditions are realized, that is, the required performances and obligations/rights are agreed upon. In use, the obligation-type CT can be used as a divisible mortgage or be used as a representation of accounts receivable, accounts payable and vouchers as it is used in accounting. While the rights-type CT can be used as divisible fixed-income bonds or as an investment vehicle. Integrate both types of CTs with a matching methodology can thus be used in any kind of peer-to-peer (P2P) system of the decentralized finance, such as crowdfunding and P2P lending. This paper thus applying this new model to solve the complex issues of supply chain finance. For feasibility, this study concludes CT is the “Verdinglichung Obligatorischer Rechte”, and CTs are better than the current corporate loans in terms of cost and benefits. In addition, it is capable of transferring risk to other investors. In terms of implementation, this paper proposes a system framework and has completed a proof of concept of the system.

Details

Language :
English
ISSN :
26741032
Volume :
2
Issue :
1
Database :
Directory of Open Access Journals
Journal :
FinTech
Publication Type :
Academic Journal
Accession number :
edsdoj.f6df580ba84e4229a28dcf3c29c2731b
Document Type :
article
Full Text :
https://doi.org/10.3390/fintech2010012