The global Covid-19 pandemic may have forced those previously reluctant to embrace tools they thought were for younger or tech-savvy generations. The lockdown measures imposed by many countries means people have had to stay indoors and rely on third parties or the internet for essentials.
Applications or platforms like Zoom and Brella have gone main-stream as businesses and even schools attempt to find ways of continuity during the lockdown. With the pandemic showing no signs of a let-up, online market places like Amazon are seeing increased orders as more people finally get the hang of shopping online.
Unfortunately, the infrastructure that supports such applications or e-commerce, in general, has not fully developed in many places. In most instances, it is the limited internet as well as the cost of data that curtails the growth of remote buying and selling. Of course, the Covid-19 pandemic has impressed on authorities the need to invest further in internet infrastructure.
Lack of trust
Meanwhile, the business of online buying and selling faces challenges that go beyond the usual limitations. Online buying and selling require a level of trust between parties involved particularly if the traders have no prior business dealings. If parties do not trust each other then such an online transaction will not be possible for the buyer in particular.
However, it has happened even during this dark period that desperate customers have made payments yet no deliveries have been made. Criminals and bad actors are often quick to seize on such desperation by starting elaborate scams to defraud unsuspecting victims.
So the challenge has been to find a solution that assuages not only the buyer but the seller as well. Usually an escrow account will suffice but as highlighted earlier, in times of an emergency like the one spawned off by Covid-19, there is hardly enough time to build such a solution from scratch if it did not exist already.
Usually financial institutions are entrusted with this task but in many cases there has been no commercial justification for building such a solution.
In countries like Zimbabwe, where operations of banks and other financial institutions were already reeling from the effects of hyperinflation, the lockdown regulations made things worse. These financial institutions are not in a position to innovate or respond to a changing environment fast enough.
That task of building an escrow-type system that would ordinarily support domestic online payments has been left to someone else, usually a non-financial institution.
In any case, many developing and smaller countries usually reserve escrow services for cross border payments, there is hardly any such solution for domestic payments.
Fortunately, some solutions are built and ready for the exact scenarios as detailed above. Algorand’s blockchain platform provides such a solution via its Algorand Smart Contracts at Layer-1 (ASC1). This layer takes a significant portion of current smart contract use cases and implements them in a way that allows them to take advantage of the performance of the Algorand platform.
The Algorand platform is already the world’s first open, permissionless, pure proof-of-stake blockchain protocol.
Also, this platform has been built to overcome the so-called blockchain trilemma, a phenomenon that is used to explain why most blockchain solutions cannot be decentralized, scalable, and secure at the same time. In many instances, users have had to forgo one of these aspects to be effective with the other two. Algorand’s blockchain has overcome this trilemma and some enterprises are switching to this platform as a result.
When the core benefits of this platform are then combined with the ASC 1 layer, it means Algorand blockchain users will be assured of instant and final value exchange without the need for a third party.
Financial institutions or any commercial enterprise that is attempting to overcome the challenge of trust now has an opportunity to do so without having to spend extensively by building a solution from scratch. The Algorand platform can scale to billions of users, something other permissionless chains are failing to achieve.
Russell Fustino, a Technical evangelist with Algorand, explains why the Algorand platform can be the solution.
“ASC 1 contract accounts are great for setting up escrow style accounts where say you want to limit withdrawals or you want to do periodic payments.”
ASC 1 Contract accounts are used to allow Transaction Execution Approval Logic (TEAL) to determine when outgoing account transactions are approved. The compiled TEAL program produces an Algorand address, which is funded with Algos or Algorand Assets. As the receiver of a transaction, these accounts function as any other account.
When the account is specified as the sender in a transaction, the TEAL logic is evaluated and determines if the transaction is approved.
TEAL contract account transactions where the sender is set to the contract account, function much in the same way as normal Algorand transactions. The major difference is that instead of the transaction being signed with a private key, the transaction is signed with a logic signature.
Contract Accounts are created by compiling the TEAL logic. Once the contract account is created, it can be used as any other address. To send tokens or assets from the account the transaction must be signed by a logic signature.
As shown above, enterprises can have a secure escrow without having to create one. With the fight Covid-19 still very much on, enterprises are better advised to hop on to the Algorand platform and start offering escrow services.
Such a solution will build confidence and increase revenues for retailers that conduct business online.