Without being a core enterprise in the supply chain or a first-level supplier, it is difficult to obtain SCF through traditional institutions due to the reliance on credit standing as a metric for deciding risk level. Blockchain offers the opportunity for companies of all sizes and backgrounds to obtain supply chain financing by relying on decentralized reputation, algorithmic risk analysis, and the coordination of hundreds of financing agents through effective token economic models.
Normally, quite a large amount of information needs to be analyzed by financial institutions in order to determine a positive credit standing or history. This may include anything from business flow models to logistics records to historical transaction data. Without blockchain, the possibility of tampering here is high, while the time and financial cost of analysis and data collection may be excessive.
The typical multi-party cooperation and review system of financial data results in several inefficiencies that prevent large capital volumes from being at their optimal liquidity. Blockchain technology would improve both the liquidity of funds and the risk tolerance of financial institutions in granting financing.