Implementing A Letter Of Credit Style Business Process For Small-Scale Contracting Using Smart Contracts

Abstract

Purpose - Demonstrate proof-of-concept for negotiating and executing a small-scale contracting job based on letter of credit within a blockchain network using smart contracts.

Design/Methodology/Approach - Using Ethereum smart contracts, we model a small-scale general contracting scenario under perfect conditions. Execution is demonstrated with the Remix Integrated Development Environment (IDE).

Findings - We show the feasibility of conducting a small-scale contracting job using smart contracts. The entire process, including job details, payment, and verification, can be conducted digitally.

Originality/value - This research continues the efforts of previous research on letters of credit on blockchain but applies it to the general contracting scenario at small scale.

Research limitations/implications - Further work is required to investigate variations in the assumptions, such as dishonesty and incompetence. Also, full-scale decentralized application is not explored here.

Practical implications - This process expands the scope of current practices and tools, such as Angi, in a decentralized manner with blockchain.

Social Implications - Full-scale adoption at the small scale is likely difficult due to disbelief in technology, cost, and resistance to change.