According to Algorand, this is the first time an EU member state will employ blockchain technology for bank and insurance assurances.
Algorand, a Layer-1 blockchain technology, has been selected as the public blockchain to enable a “innovative digital assurances platform” for usage in Italy’s banking and insurance sectors.
The platform powered by Algorand is set to go live in early 2023. According to Algorand’s statement on December 13, this will be the first time a European Union member state will deploy blockchain technology for bank and insurance guarantees.
A bank guarantee is a pledge made by a lending institution to compensate for a loss if a borrower fails to repay a loan. It’s an alternative to giving a supplier or vendor a security bond or a deposit. A comparable guarantee is provided by an insurance company rather than a bank.
According to Algorand, blockchain technology is appropriate for the “digital sureties” platform because to its rapid, efficient, low-cost, and scalable data exchanges, as well as its capacity to defend against fraud.
The blockchain-backed digital sureties platform is being developed by the Catholic University of Milan’s Research Center on Technologies, Innovation, and Finance (CETIF) as part of Italy’s National Recovery and Resilience Plan, an initiative aimed at boosting Italy’s economic recovery following the COVID-19 crisis.
According to Federico Rajola, professor at CETIF, they picked Algorand for its “”Our objective is to assist Italy not only recover from the economic effect of Covid-19, but also succeed via innovation and leadership,” the company says. We think that these platforms can and will significantly contribute to the country’s competitive sustainability, benefiting everyone.”
Cointelegraph reported in September that Algorand has boosted its transaction speed, processing capacity, and cross-chain capability with a significant protocol change. The layer-1 blockchain network added state proofs to its mainnet, allowing for trustless communication across blockchain protocols. Algorand’s processing speed rose from 1,200 to 6,000 transactions per second as a result of the improvement.