b_verify, new blockchain system, will disrupt supply chain management...in a good way.

When it comes to getting business loans, large corporations generally have the upper hand. With a longer track record, more assets, and big brand power, they benefit from better loan terms than their small to medium-sized counterparts. However, an emerging new technology might change all of that.

An interdisciplinary team composed of members from MIT, Wharton, and Boston College has developed a new blockchain-based system that could forever alter the global supply chain. The system is called “b_verify” and is designed to help those small and medium businesses secure financing with better terms.

What is b_verify?

b_verify is a blockchain-powered app that lets potential lenders check on a company’s inventory transactions easily and remotely. This gives them instant, indisputable data on how well the company is doing and whether or not they deserve a loan. For small to medium businesses, this means qualification for better financing terms that they wouldn’t normally get.

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When determining the terms of a loan, lenders look at the company’s creditworthiness. It is more difficult to determine this accurately for small and medium-sized businesses. This leads financers to deem a loan riskier, forcing them to offset the risk by charging higher interest rates or by tightening the terms on the credit.

The team behind b_verify believes that when lenders are able to clearly observe inventory transactions, they can provide better loans to honest small to medium size businesses. These businesses account for more than half of all jobs and a third of the global GDP according to Gerry Tsoukalas, a Wharton professor of operations, information, and decisions, and a member of the b_verify team.

How does b_verify work?

Blockchain itself is a virtually unhackable database that makes falsifying transactions nearly impossible. Sounds like the perfect platform for making a way to accurately track inventory transactions.

The team created b_verify as a hybrid of private and public blockchain systems. This means that they were able to combine the large scale and subsequent security of public blockchains with the relative privacy of private ones needed for supply chain management.

In short, they gave the following example to explain how the system works:

A farmer bringing goods to a warehouse would place them on a digital scale that records the weight. A human employee would then manually confirm the weight and, if it matches up, sends the data to a server running the b_verify protocol using their private digital key. The server then processes and records the data into the public blockchain where lenders can access the information to verify inventory as collateral for a loan. If everything matches up, they can offer a better loan to the company with peace of mind.

How will b_verify impact the global supply chain?

As of now, the b_verify system has serious positive implications for small and medium businesses. However, it can’t change the way the global supply chain functions without top-down legislation from governments.

The team behind the project proposes b_verify as a standard to be used by all companies and all lenders. They also hope that by accepting it as a standard, cheating in the global supply chain will be significantly reduced.

“Blockchain technology could provide an efficient way to accomplish this [financing operations for small to medium size businesses] by furnishing input transaction verifiability in supply chains in a way that is accessible to small and mid-size companies. We believe this is a novel use case for blockchain technology that has hardly been researched,” Weber, another team member, says.

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