Banking made easy! Banking has never been this easy! Yes, with Algorand's block-chain, the world's banking system could be revolutionized and improved upon for the benefit of everyone and every sector.
In this article, we are going to be take at how ALGORAND is revolutionizing the banking sector. In order to understand this better, we shall look at what banking is really all about.
We shall briefly view the Algorand protocol, block-chain and digital currencies, as well as how they can be related.
ALGORAND AND BANKING: DIGITAL BANKING AND DIGITAL MONEY
WHAT IS ALGORAND?
ALGORAND is the latest version of block-chain. More importantly, Algorand is an improvement on previous versions of block-chain. Algorand is the world's 1st open-source, pure PoS (proof-of-stake) chain innovation, that ensures the improvement of scalable, reliable block-chain solutions in the digital world.
Algorand's consensus mechanism is the pure proof of stake system that ensures Algorand's block-chain is truly de-centralized. Algorand's protocol is also very scalable as a result it's feature of Algorand Smart-contracts at Layer-1 (ASC1) and it's dual-chain (on-chain and offchain) structure. This is known as Algorand's Layer-1 Innovation and Smart-contracts architecture.
Algorand is the solution to the block-chain's trilemma of not being able to offer enough scalability, security and de-centralization all at once.
THE CONCEPT OF BANKS AND BANKING
As we all know, money is standard of trade and it's function in human living cannot be overemphasized. It is a Central tool necessary for the effective functioning of any sector across the globe.
For years, banks (commercial and central) have served as money saving and management institutions who help to keep, print, circulate, transfer money in various forms (coins, drafts, paper, gold metal, etc). Banks are central institutions or entities that serve as intermediaries between two or more traders. They also keep money and data of customers with a promise of higher yeild.
The two principal functions of banks are:
- Saving money
- Giving-out of Loans
These two are what makes a bank exist. Customers save money in banks with information about their personal details; banks use this money to give out loans to borrowers at a particular interest rate over a period of time. The borrowed amount will be paid back in due time with the accrued interest (which is the bank's profit).
HOW ALGORAND CAN HELP BANKING
Banking is an age-long practice. As the population of the world increases, there has been the need at various points in history to improve on the banking system. Currently, many nations of the world already have banks that operate using digital means. Nonetheless, the level of digitization is not enough. Our banking system needs to be de-centralized, at least to a great extent, if not fully de-centralized. The following are some of the reasons why the banking sector needs block-chain:
- COST AND TIME
Today, we all know that there is need to greatly digitize our banking system. Physical keeping and transacting of money is time-consuming and costly.
- CENTRALIZATION
Financial institutions act as central entities or intermediaries between people and their money. We have heard over and over again that this is very risky. Banks (institutions) can fold up at any time. Moreover, customers' data are with these banks. This means that customers' data are not really secure since they are in the hands of human authorities that are prone to mistakes and corruption.
BENEFITS OF ALGORAND'S BLOCK-CHAIN TO BANKING: DIGITAL BANKING
The main benefits of blockchain Speed and Decentralization. ALGORAND brings both and many more into the banking sector. If the banking sector can be de-centralized, a lot of risks would be averted.
- TRUSTLESS TRANSACTIONS; NO NEED FOR INTERMEDIARIES
There would be no need to trust human authorities with our data and money. All transactions can be carried out on the block-chain without the need for any intermediaries.
- AGREEMENTS CAN BE MADE WITHOUT 3RD PARTIES
With Algorand's block-chain, agreements involving money such as business agreements or payments for services can be made using smart-contracts. Smart-contracts are contracts that execute themselves based on what the two involved parties agreed upon.
- ALGORAND FACILITATES DIGITAL BANKING AND USE OF DIGITAL MONEY
With the block-chain, digitization of assets and banking becomes possible. Currencies can be digitized. Transactions can be carried-out online.
- SECURITY OF CUSTOMERS' DATA
With the block-chain, customers can be rest assured that no human has access to their data. Every data can be stored in the block-chain. Data stored on block-chain or Algorand's block-chain cannot be altered neither can it be accessed.
- HIGH TRANSACTIONS SPEED
Another feature of Algorand's block-chain is high transactions speed. Algorand solves the speed problem of banking. Transactions will process very fast, without any hindrances.
- LOW OR NO TRANSACTIONS COST FOR TRAD
Since block-chain eradicates central entities or intermediaries, there will be no costs charged from any central parties for physical processing of transactions.
THE CONCEPT OF DIGITAL BANKING, DIGITAL MONEY AND IT'S BENEFITS.
Digital money is money in electronic form as opposed to physical money like paper, coins, gold, etc. Meanwhile, money needs to be as stable as possible.
Stability is the extent to which the value of money is constant. A given currency is said to be unstable if it keeps changing in value at an incessant rate over a relatively short period of time. If its value does stay relatively constant, it is said to have good stability or is stable. A main problem caused by instability of money is that it seriously affects the purchasing power of that currency.
Hence, the need for money that is very stable.
BENEFITS OF DIGITAL MONEY
As I wrote earlier, money is expected to be as stable as possible. We have discovered that by digitizing money, stability could be more readily attained, along with various other benefits of it's digitization.
Digital currency is money in digitized/electronic form. It is not physical. Digital money functions like physical money except that it can't be held with one's hands, physically counted, or tendered.
Benefits of digitized or digital money include:
- Digital money facilitates very quick transactions and does not require high transaction fees unlike when dealing with physical money.
- It is borderless and geographically un-restricted. Anyone can send and receive digital money from anywhere to any other place in the world, via online means.
- Digital money is now being in use to a great in many economies. Improving on its adoption will be easy.
- The idea of stability and stable currency is more possible with digital or crypto currencies by the introduction of stable-coins.
CONCLUSION
Algorand is the world's 1st open-source, pure PoS (proof-of-stake) block-chain innovation, that ensures the improvement of scalable, reliable block-chain solutions in the digital world.
With Algorand's block-chain, the world's banking system could be revolutionized and improved upon for the benefit of everyone and every sector. For many years, banks have acted as central entities or institutions that have control over customers' money and data. We don't even know what they use our data for. As central parties, they charge customers some money for acting as intermediaries during transactions.
Algorand will help to address this issue by facilitating the decentralization of banking, as well as digitization of banking and money. This will lead to many benefits. Some of these benefits include improved security of funds and data, reduced transactions cost; very high transactions speed; trustless agreements, and so on.
For more information, Check out ALOGORAND'S WEBSITE HERE
