The layer 1 blockchain platform, Algorand has been chosen as the public blockchain to support an “innovative digital collateral platform” to be used in the Italian banking and insurance markets.
The Algorand-backed platform is expected to launch in early 2023. As Algorand announced on December 13, It is the first time that a Member State of the European Union will use Blockchain technology for banking and insurance guarantees.
A bank guarantee is when a lending institution promises to cover a loss if a borrower defaults on a loan. It is an alternative to providing a bond or deposit to a supplier or vendor. An insurance guarantee is similar, but it is offered by an insurance company instead of a bank.
Algorand affirms that Blockchain technology is ideal for the “Cauciones Digitales” platform due to its speed, efficiency, low cost and scalability in data transactions, as well as for its ability to offer protection against fraud.
Just in: Algorand has been selected to be the public blockchain that will support an innovative digital guarantees platform in Italy.
This new Digital Sureties platform is being developed by @Cetif1 and endorsed by @bancaditalia and @ivassocial: https://t.co/EBsOkBEwcb pic.twitter.com/dCFatoYILk
—Algorand (@Algorand) December 13, 2022
The Center for Research in Technologies, Innovation and Finance at the Catholic University of Milan (CETIF) is developing the blockchain-backed digital surety platform, which is part of Italy’s National Recovery and Resilience Plan (PNRR), an initiative aimed at boost the country’s economic recovery after the COVID-19 crisis.
Federico Rajola, CETIF professor, said that chose Algorand for its “unparalleled level of innovation” among permissionless DLT solutions and its “sustainability leadership,” adding:
“Our goal is to help Italy not only recover from the economic impact of Covid-19, but also excel through innovation and leadership. […] We believe that these platforms can and will drastically contribute to the competitive sustainability of the country for the benefit of all.”
In September, Cointelegraph reported that Algorand had increased its transaction speed, processing power, and cross-chain functionality with a major protocol upgrade. The Layer 1 blockchain network implemented State Proofs to its mainnet, allowing trustless communication between different blockchain protocols. The upgrade increased Algorand’s processing speed from 1,200 to 6,000 transactions per second.
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