Blockchain Can Keep Online Auctions Fair According To Financial Exchange
Everyone knows that China does not love cryptocurrencies, but the blockchain technology stands on its own and even if you are like China and you do not see Bitcoin in a positive light, there is still a use case for blockchain tech. Recently, a financial state-backed asset exchange in China is deciding to use this technology.
Why? To make online auctions safer and tamper-proof. In an effort to raise the transparency of this kind of transactions, the Chongqing Financial Asset Exchange has filed a new patent on the China State Intellectual Property Officer in December last year.
The Patent To Use Blockchain Technology In Online Auctions
The patent was created to explore how to create a system that could allow multiple parties to use the distributed ledger technology (blockchain) to bid for a financial asset on an online platform. In the document, it can be seen that the network would be run by validator nodes that would be completely separate from the companies who do the bidding.
This way, it could be secured that the software would work as efficiently as intended for the company when financial companies intend to buy letters of credit or corporate bonds on online auctions.
It would work like this: the companies would submit their bids, which would go to the network and then the validator nodes would authenticate it and broadcast the new price calculated on different criteria which would be governed by smart contracts that would run on the blockchain.
According to the Chongqing Financial Asset Exchange, these efforts could help the network to be protected against malicious data alteration that could be made by bidding parties or even by the organization helding the auction and the whole affair would be considerably more transparent this way.
The patent states that a centralized online platform could make the bidding process unfair and less transparent as the bidding parties would not be able to supervise the processes and the security of the data could not the guaranteed this way.
About The Chongqing Financial Asset Exchange
The CQFAE was founded in 2011 by the municipal government of Chongqing as an authorized exchange that would be an intermediary between some small businesses looking to raise capital and their lenders, so it was mainly a middlemen for credit. The company also has on its jurisdiction online auctions, which are the reason for the patent.
Last month, the government of the city has announced that they plan to create a blockchain digital asset exchange soon, which caused some confusion and controversy as some people speculated that the Chinese government was backing a cryptocurrency platform, but it looks like it will be aimed at traditional financial assets instead of using the blockchain technology.
The government has affirmed that the focus of the platform would be on non-standard assets like credit loans and letters of credit.