SMART TENDER MANAGEMENT SYSTEM USING BLOCKCHAIN
Abstract— Tendering is a common method used by governments and businesses to procure goods or services from manufacturers or service providers. However, because e-tendering is the most commonly used procurement method, there are a number of security implications. Blockchain technology, which is heavily focused on information decentralization and is secured by encryption integrated with undeniable block-based architecture for transaction management, can be used to address these security implications.
This paper investigates how smart contracts (based on the Ethereum blockchain) can be used to design a distributed e-tendering system. The project is divided into four sections: 1. the tender creation and publishing process, 2. the tender bidding process, 3. the bid evaluation and negotiation process, and 4. the selection of the winning bid.
Each process is implemented using a different algorithm. The security and audibility issues are assessed and compared to the current tendering process. The primary goal of this paper is to put in place a fair, transparent, and open tendering scheme. Keywords: blockchain, fair and open tendering scheme, smart contract, ethereum, e-tendering I.
INTRODUCTION
Current E-Tendering systems are not ‘fair and open,’ as information is not shared with all stakeholders (Right to Information[1]). For example, when a company is selected as a winner of a contract, other companies that bid on the same tender are not notified of why their bid was rejected and why a particular company was selected as a winner. A company can request this information, but it is a time-consuming process. Even though auditing these documents is possible, evaluating them takes time.
In addition to not being transparent, security is a major issue for these portals, leading to fraud and manipulation of data stored in a centralized database [2],[3]. If a hacker gains access to this centralized database, bids can be leaked to competitors, resulting in significant financial and strategic losses for a company [4].
Blockchain technology, which is heavily focused on information decentralization and is secured by encryption integrated with undeniable block-based architecture for transaction management, can be used to address these security implications.
As a result, Blockchain and Smart Contracts can be used to create a transparent, decentralized, and secure tendering framework that allows bidders to monitor portal functions and all activities carried out by the tender portal.
II. BLOCKCHAIN TECHNOLOGIES AND PERSPECTIVES A) Blockchain Explanation Blockchain is based on the idea of decentralization [5]. As a result, it can be thought of as a distributed database. In this case, the distributed database uses the concept of full replication, which means that each node has a complete copy of a blockchain [6]. When the blockchain needs to be updated due to a transaction, a process known as mining occurs [5],[7]. A block is made up of many transactions.
The mined block is broadcasted to all other nodes using a consensus protocol [8]. In the header of these blocks, there will be a cryptographic hash that corresponds to the previous block in the chain. If a block is manipulated, the hash associated with that block changes, requiring all subsequent blocks to be re-mined, which is not possible. In this way, blockchain makes use of the property of immutability.
The core of blockchain is how the blockchain is implemented and what consensus protocol is used. Smart Contracts (B) In layman’s terms, a smart contract is similar to an account on a blockchain, but instead of being controlled by a human, it is controlled by a small amount of code [9].
Smart contracts have memory and storage space in which to store information[10]. Smart contracts are immutable because they are a part of the blockchain, which is also immutable. As a result, once a smart contract with these agreement clauses is created, the agreement between the two parties cannot be changed[11].
SMART TENDER MANAGEMENT SYSTEM USING BLOCKCHAIN
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