Today the Algorand public blockchain announced that it is involved in the Italian digital guarantee platform, Fideiussioni Digitali, which includes the Bank of Italy, insurance regulator IVASS, and 31 financial institutions. The solution also uses R3’s Corda enterprise blockchain.
The platform is expected to go live next year and has been in development since early 2020. The solutions has been implemented by payment network firm SIA, CeTIF (Research Centre on Technology), and technology company Reply.
Guarantees, sometimes referred to as sureties, are provided for public sector contracts and construction to ensure the contractor fulfills its obligations. The guarantee compensates the construction project owner if the contractor fails to follow through.
Sureties are usually issued by banks or insurance companies. Italy has experienced massive amounts of fraud where the guarantees are fake. Invariably the contractor is duped into paying for the guarantee, which is not worth anything. Previous reports pegged the fraud at €1.6 billion over a four-year period.
We’ve requested details on how the functionality issplit between the two blockchains but didn’t receive a response in time for publication. We suspect that Corda is used for multiparty workflow, and a final fingerprint or hash of the surety is stored on the public blockchain.
Distributed ledger technology (DLT) has been used for other guarantee platforms. In Australia, the Lygon platform was developed by ANZ, Commonwealth Bank, Westpac, IBM and others. Thailand’s Blockchain Community Initiative had issued $300 million in guarantees by September 2020.