Blockchain Can Make Auctions Tamper Proof
With its rising popularity, the applications of blockchain also seem to be rising. In a bid to make online auctions transparent and tamper-proof, a financial asset exchange in Chongqing, China, is currently working towards a system that will help them achieve the goal.
The state-backed Chongqing Financial Asset Exchange (CQFAE) had filed a patent in December 2017, which was released on Friday by China State Intellectual Property Office. The CQFAE is working on a system which would enable multiple parties to take part in the auction for a certain financial asset on a distributed network.
The patent says that the visualised network would be run with the help of invited validator nodes which will be unique for each of the companies who end up bidding for the assets. After the submission of the bid by the companies, the validator nodes will verify the data and then send on the new price for the auction which will be calculated with the help of several criteria using the smart contracts of the blockchain.
The CQFAE recognised the idea to be of the utmost essence because of the drawbacks of the existing centralised database system. The current system is susceptible to malicious alteration of data which could possibly rig the bid.
It stated in the patent filing:
“The centralized online platform could make the bidding process become unfair and less transparent as the bidding parties are also unable to supervise the process. As such, the authenticity and security of the bidding data can’t be guaranteed.”
The CQFAE was founded by the municipal government of Chongqing back in 2011 as an authorised exchange. It acts as a mediator between businesses who wish to raise funds and the lenders which include investment firms and banks. It also assists in trading of letters of credit and corporate loans.
As of now, the firm’s plan to release a product based on the patent application remains ambiguous. However, the patent has been revealed a month after the Chongqing city government unfolded its ambitions to launch a “blockchain digital asset exchange”.
This news sprung mass confusion in the Chinese blockchain community where they misinterpreted it to be a government-backed cryptocurrency trading platform.
However, a government official later clarified that the system will essentially be used to auction off “non-standard assets” like a letter of credit and credit loans.