Porting a traditional financial asset on Algorand

General
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Hi guys,

I’m currently reading up on blockchain projects and I especially like the Algorand project. I’m working in a financial services company and I’d like to see whether some of the instruments we trade with our counterparties (about four of them) can not be set up on a decentralised database to reduce operational efforts and the connected costs. We have valuations that we exchange back and fourth every day and that is currently done via weirdly custom text, csv and xml files and all is tied together by a zoo of E-Mails and scanned PDFs that are the termsheets to those contracts.

While that “works” I was wondering whether using a blockchain to pool some of these efforts is not a good idea and I’m currently reading up on whether Algorand is a good fit for this at all (what drew me to it is the low cost, the natural closeness to the financial sector and the green aspect of it). It would be great if we had a “source and sink” interface where we could just upload and download new information, query from it and would not need to do so much account management on our side. I read already (or more skimmed it) this nice example (Dropbox Paper) which goes a lot further than I initially thought about, this is really a bond that has ALGO as notional and pays coupons in ALGO (with the connected niceties that really everything is packaged) where I don’t think that I could convince my employer in this decade to do this - but starting small, use an ASC1 to share day-to-day valuations and counterparty valuations and maybe port then with the time more and more to it - until the point where you’re not sending and receiving USD but potentially USDC and so on.

But before that I wanted to see whether what I’m imagining makes sense at all and what ‘no-fiat-complexities’ would be connected to this. Can I share small data packages (in the byte- to kilobyte range) safely (!) between authorized participants in a smart contract? Can that be extended to make daily settlement payments in a stablecoin (or fiat directly) or does that need to be in ALGO? Would be great if someone with a bit more knowledge would help me out here.

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The challenge you’re having here is niether unique nor special. You’re trying to transition from an existing set of technologies onto a different one ( blockchain ). One question that I have for you is this : what is the fastest communication time you would need between two trusting parties ? Blockchain provide syncronization across block boundries ( in Algorand, that’s 4 second ). If you’d like to have a shorter time, you’ll want to take that task off-chain.

I don’t know enough about your use cases, so I’m not sure if my answer would be helpful or not : blockchains are not the ultimate solution for everything. Blockchain are great as a way to syncronize parties with conflicting interests. But, if you need to maintain an internal database that doesn’t need to be public, you’d better be off with a propriatery solution, which would likely to perform better for your needs.

All that being said, it does sounds from your description that some of the existing infrastucture could be refactored… I would be hasitent of intoducing a “blockchain” component into the mix without making the attempt to clean it up first ( but that’s just me )

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