Envisioning the digital transformation of financial documents: A blockchain-based bill of exchange

A Bill of Exchange (BoE) is a paper-written contract involving three parties A, B and C where A is economically in debt with B and in credit with C. Once the parties approve a BoE, C is legally bound to pay B on behalf of A within a set deadline, so that the debt of A towards B is extinguished. Although regarded as an elegant and powerful variant of a promissory note, over time the BoE has become unpractical to use in a global market where suppliers and customers aren’t next-door companies anymore. On the other hand, the blockchain distributed ledger, AES authentication, and digital archiving with suitable long-period standards (e.g., PDF/A) may encourage the revival of such an instrument, while ensuring legal validity, strength and a non-tampering warranty. This paper exploits said state-of-the-art technologies to bring the paper-based BoE into the digital era as the DigiBoE. Its envisioned applications are B2B, C2C and B2C secure and legally acknowledged transactions for debt resolution no longer requiring financial intermediaries.