Seoul, March 11 (IANS) Smart contracts based on blockchain technology can effectively prevent delay in payments for delivered goods and make it impossible to unilaterally alter original contracts, a local think tank said on Sunday.
The report by Korea Small Business Institute (KOSBI) said blockchains can open new horizons for how small and medium enterprises (SMEs) conduct business with their larger contractors, reports Yonhap news agency.
Blockchain, often associated with cryptography and virtual currency, is considered an incorruptible digital ledger that can document all kinds of transactions and data.
The system is designed for a wide range of data sharing among a vast number of computers that are all linked together in a “chain” that theoretically cannot be tampered with.
Park Jae-sung, a research fellow at KOSBI, claimed that a contract distributed through the blockchain system will make delayed payment and unilateral changing of a deal a thing of the past.
He added that because smart contracts that are linked to virtual currency can be set in advance so immediate payments are made when contractual conditions are met, there is no way for a big company to withhold or delay payment.
“To create such an environment, it is imperative that a kind of public blockchain be developed and set up so it can be used by companies,” the research fellow was quoted as saying.
He said that the first smart contract should be reached between SMEs and the government and state-run corporations so their feasibility and utility can be checked.
In addition, the researcher stressed that blockchains are widely hailed as a next-generation technology that can bring about considerable innovation.