Fast, Secure and Scalable Financial Applications Powered by Algorand’s Smart Contracts
Financial Transactions have often been made through agreements, paperwork, or even verbally which has caused a lot of catastrophic consequences between parties agreeing. These methods are slow, less secure, less transparent, outdated, time-consuming, and less cost-effective, as a result of that, third parties are often associated to validate the terms in the agreement for both parties.
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In the blockchain, smart contracts are used to perform transactions automatically with little to no time consumed when the conditions are met to validate the transactions using lines of codes that will be processed and stored on the blockchain.
Smart Contracts will replace these outdated traditional agreements as an essential blockchain functionality that allows modern, frictionless transaction methods and gives end-users more control with fewer intermediaries.
Smart Contracts are basic lines of code that are stored on the immutable blockchain and automatically execute when certain predefined terms are met and validated, Thus, removing the need for third party validation. Algorand provides both stateful and stateless contracts. Stateful Smart Contracts form the backbone for building distributed applications on the Algorand blockchain. These smart contracts provide access to on-chain state values and can be combined with other Algorand layer-1 features to implement dynamic and unique applications that take advantage of Algorand’s scalability, performance and quick transaction finality.
Algorand’s Smart contracts are highly reliable in that they are executed on a tamper-proof (trustless), secure and decentralized network, with no forking making all transactions final and also offer faster, error free, immutable applications that are cost effective for financial organizations.
Some advantages of using the blockchain are:
Increased Efficiency and Speed
Transaction histories are becoming more transparent through the use of blockchain technology. Because blockchain is a type of distributed ledger, all network participants share the same documentation as opposed to individual copies. That shared version can only be updated through consensus, which means everyone must agree on it. To change a single transaction record would require the alteration of all subsequent records and the collusion of the entire network. Thus, data on a blockchain is more accurate, consistent, and transparent than when it is pushed through paper-heavy processes. It is also available to all participants who have permissioned access. To change a single transaction record would require the alteration of all subsequent records and the collusion of the entire network. Which can be, you know, a headache.
There are several ways blockchain is more secure than other record-keeping systems. Transactions must be agreed upon before they are recorded. After a transaction is approved, it is encrypted and linked to the previous transaction. This, along with the fact that information is stored across a network of computers instead of on a single server, makes it very difficult for hackers to compromise the transaction data. In any industry where protecting sensitive data is crucial — financial services, government, healthcare — blockchain has an opportunity to change how critical information is shared by helping to prevent fraud and unauthorized activity.
If your company deals with products that are traded through a complex supply chain, you’re familiar with how hard it can be to trace an item back to its origin. When exchanges of goods are recorded on a blockchain, you end up with an audit trail that shows where an asset came from and every stop it made on its journey. This historical transaction data can help to verify the authenticity of assets and prevent fraud.
Increased Efficiency and Speed
When you use traditional, paper-heavy processes, trading anything is a time-consuming process that is prone to human error and often requires third-party mediation. By streamlining and automating these processes with blockchain, transactions can be completed faster and more efficiently. Since record-keeping is performed using a single digital ledger that is shared among participants, you don’t have to reconcile multiple ledgers and you end up with less clutter. And when everyone has access to the same information, it becomes easier to trust each other without the need for numerous intermediaries. Thus, clearing and settlement can occur much quicker.
For most businesses, reducing costs is a priority. With blockchain, you don’t need as many third parties or middlemen to make guarantees because it doesn’t matter if you can trust your trading partner. Instead, you just have to trust the data on the blockchain. You also won’t have to review so much documentation to complete a trade because everyone will have permissioned access to a single, immutable version.
Algorand’s Smart Contracts (ASCI1)
Algorand’s Smart Contracts (ASC1) offer the foundational attributes of security, scale, and decentralization found in Algorand’s Layer-1 protocol, allowing developers to take advantage of the network’s speed, cost-effectiveness, and simplicity. Enabling complex governed transactions with simplified tools that can build a wide range of applications, and removing the technical barriers that undermine blockchain adoption providing benefits that include:
Ability to build seamless complex applications that solve real-world use cases across different industry segments
Scalable, fast and secure execution
Transaction latency under 5 seconds optimizes the end-user experience
The Algorand blockchain never forks, which means all transactions are final
Low transaction costs, Negligible transaction fees represent significant savings over time
Reduces risk with instant settlement through trustless execution
Flexible as ASCI1s can be applied to specific transactions, all transactions from an account, or full power rich dApps
Increased speed to market with comprehensive development resources such as simplified templates for Stateless Smart Contracts and examples of different complex custom dApps for Stateful Smart Contracts
Low cost to execute – ASCI1 transactions have the same fee as any other transaction on the Algorand blockchain at .001 Algos
It is fully Decentralized, Decentralization by means there is no de facto central authority
With over 1,000 transactions per second throughput offer a point-of-sale speed that scales billions of transactions with ease
Smart Contracts are highly flexible, reliable in that they are executed on a tamper-proof (trustless) network providing the transparency needed, with error-free, immutable, and accurate applications.
Algorand Powering the Next Generation Financial Applications
A financial revolution is coming, and financial institutions must wade through the increasing challenges they face and either adapt or risk being unseated by the competition. Today, money and the exchange of assets around the world are moved using complex systems that are slow and have many added fees with each intermediary. With more demands for things like cross-border payments and overseas purchasing, individuals and institutions looking to compete in the global economy need faster, scalable, easier, and safer ways to transact.
The disruption of the financial industry will be redesigned by new technologies, mainly led by blockchain.
Blockchain offers a vast range of opportunities with the transparency, speed, security and efficiency that customers demand, thus, leading the next evolution of financial applications.
Algorand, founded by Silvio Macali is set out to reinvent blockchain and developed the world’s first truly public, permisionless, scalable, and pure proof-of-stake protocol that does not fork making all transactions final, decentralized, secure and cost efficient.
Algorand is the first to provide immediate transaction finality, opening up exciting new use-cases and applications and is delivering the speed and ubiquitous infrastructure that financial institutions require to maintain control and governance over their operations.
With the newly added features such as Stateful Smart Contracts, Rekeying and Fast Catchup, transactions will be made seamless and faster.
Stateful Smart Contracts: Algorand Smart Contracts (ASC1) offer the foundational attributes of security, scale, and decentralization found in Algorand’s Layer-1 protocol, allowing developers to take advantage of the network’s speed, cost-effectiveness, and simplicity. Enabling complex governed transactions with simplified tools that can build a wide range of applications, and removing the technical barriers that undermine blockchain adoption. Algorand’s Smart Contracts are highly flexible, reliable in that they are executed on a tamper-proof (trustless) network providing the transparency needed, with error-free, immutable, and accurate applications.
Rekeying: Algorand’s Rekeying offers a seamless, easier experience for users and custody providers by allowing flexible changes of Private Spending Keys anytime without changing Public Addresses, giving Public address more continuity, and reducing operational overhead with the changes of Private Spending Keys.
Fast Catchup: Fast Catchup is a new feature and will rapidly update a node using catch point snapshots. A new command on goal node is now available for catchup. The entire process should sync a node in minutes rather than hours or days.
Algorand provides a common, scalable and interoperable platform that speeds up application development, increase iteration, and results in faster deployments with more cost-efficient capabilities.
With the secure, fast, reliable transaction processes with the Algorand blockchain, financial transactions will soon be powered by the blockchain technologies.