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 have been implemented by payment network company SIA, CeTIF (Center for Technology Research) and technology company Reply.

Guarantees, sometimes called sureties, are provided for construction and public sector contracts to ensure that the contractor meets its obligations. The guarantee compensates the construction project owner if the contractor defaults.

Bonds are usually issued by banks or insurance companies. Italy has experienced massive amounts of fraud where guarantees are false. Invariably the contractor is tricked into paying the warranty, which is worthless. Previous reports pegged the fraud at 1.6 billion euros over a four-year period.

We requested details on how functionality is divided between the two blockchains, but did not receive a response in time for publication. We suspect that Corda is used for multi-party workflow, and a final collateral hash or fingerprint is stored on the public blockchain.

Distributed ledger technology (DLT) has been used for other collateral 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 collateral by September 2020.