In the first part of this series on why I voted for Algorand protocol for developing IBFx as the token of IBF Net, I underlined the trilemma of achieving scalability without sacrificing security or decentralization. IBFx is primarily designed as a social crypto that will capture the value created by contribution of efforts (volunteering) and of assets (donations). Based on a premise that both forms of charitable actions create value, Project Benevolence involves tokenization of such value. As fungible tokens, such social cryptos will optimize the mobilization of both forms of charitable action by facilitating a trade-off between the values created. We had to find a way to create such a fungible token that can carry value and change hands in a secure and cost-less manner.
As we moved on with further analysis of the actors and factors that would motivate them to act in a given way, we realized that the exchangeability of the fungible social cryptos (earned through benevolent action) in future may not be a significant motivator for a section of the charitable actors. There was a need for esteem tokens that would appeal to the need for self-actualization, or put simply, provide for the feel-good factor for these charitable actors. And such tokens had to be unique as well as varied to go with different levels of esteem associated with the quality and quantity of charitable contribution of a particular actor. We had to create a series of unique and non-fungible IBFs esteem tokens.
The solution was not too far to seek. Our developers who had little prior experience in working with Algorand protocol took minimal time in learning that they can easily issue both IBFx and IBFs as Algorand Standard Assets (ASA) – as fungible and non-fungible tokens. And these could be issued straight in Algorand’s Layer-1 blockchain. This meant a lot. This meant that we were going to benefit from one of the fastest, most secure and most economical infrastructures available in the blockchain space. This meant that our tokens could be combined with smart contracts with lots of advanced capabilities. This meant that we could benefit from the rich set of developer tools and resources to customize the tokens in many ways. Further, we could issue both IBFx and IBFs – the fungible and non-fungible tokens – in restricted mode, to ensure compliance with country-specific regulations and region-specific Shariah norms. Our restricted version tokens could now be sent only to certain accounts in the Algorand network with the restrictions related to location or other parameters.
A very promising use case with immense potential for humanitarian organizations relates to a blockchain based voucher system. Thanks to the unrelenting efforts by my colleagues at the Islamic Research and Training Institute, we co-invented and were issued a patent
Indeed, ASAs may prove to be a boon in the context of many use cases we are focusing on seeking to help build a halal ecosystem. A very promising use case with immense potential for humanitarian organizations relates to a blockchain based voucher system. Thanks to the unrelenting efforts by my colleagues at the Islamic Research and Training Institute, we co-invented and were issued a patent (sg 10201908262Y) by the Intellectual Property Office of Singapore. The solution aims to enhance the efficiency and effectiveness of the current system which allows humanitarian organizations (also governments) to authorize selected goods and services providers (such as, private vendors, schools and hospitals) to provide selected goods and services to eligible parties or beneficiaries. Arguably, when the private sector provides such goods and services in return for vouchers issued by the government or international humanitarian and development agencies to support disadvantaged groups and the goods and services are provided through the market, competition is encouraged. This may improve the quality and quantity of the provided goods and services. However, it is often difficult to trace, verify and monitor this governmental or organizational assistance in a real time environment. Further it is difficult to identify if such aid is lost due to fraud, waste or have ended up in the hands of corrupt or inefficient organizations or individuals. I believe, such a voucher can be issued as a restricted fungible token or NFT that is bound by a set of rules earmarking the token to be usable only in transactions between the user and any of a set of one or more authorized providers of goods and services and may also have a predefined finite period of validity.
Let me cite another example of our use case that relates to preservation and development of real estate assets under waqf or Islamic endowment. IBF Net has developed an AI-based model to identify real estate assets under waqf with maximum potential for development. Add to this the possibility of creating restricted real estate non-fungible tokens (NFTs) and digital ownership registries. You are almost there in addressing the long-standing twin challenges facing the global waqf sector – preservation and development. Through NFTs it is possible to retain the uniqueness of a waqf property in terms of location, nature and size, intended use and beneficiaries, management methodology etc. as captured in the waqf deed. Bring in smart investment contract(s) that share(s) user rights and benefits with private capital providers over a finite time frame in a fair manner and the property can now be developed to its fullest potential. Smart contracts can pass on the apportioned benefits to the respective stakeholders that include waqf bodies, trustee-managers, private capital providers, beneficiaries as per the agreements in place in an automated fashion.
ASAs provide benefits such as increased speed, core security, simplified usage, minimal transaction costs as well as transaction finality on a high performance blockchain by providing a standardized, Layer-1 mechanism to represent any type of asset on the Algorand blockchain which include fungible, non-fungible, restricted-fungible and restricted-non-fungible assets. These are easy and simple for developers and enterprises to issue and are interoperable with all assets issued on Algorand. Another key benefit is the asset spam protection that prevents unknown assets that may have tax, legal, or reputational risk from being sent to users without their explicit approval (users must opt-in to accept new assets). This takes care of the privacy and security of users using ASAs. Further, issue of tokens on Algorand provides for Role Based Asset Control (RBAC) or the unique functionality of optional and flexible asset controls for issuers to meet compliance, and regulatory requirements.
A look at the web-resources shared by Algorand reveals the wide array of use cases involving fungible and non-fungible tokens. Here is a partial set of what could be represented on layer 1 of the Algorand blockchain with ASAs:
- In Game Points
- Stable Coins
- Loyalty Points
- System Credits
- In Game Items
- Supply Chain
- Real Estate
Restricted Fungible Tokens:
- Gov’t Issued Flat
Restricted Non-Fungible Tokens:
- Real Estate
- Ownership Registries
- Regulatory Certifications
Indeed, no one should be surprised if Algorand moves on to become the most preferred blockchain ecosystem for developers to build DeFi and other Dapps in the times to come. The Layer-1 architecture not only supports the creation of Algorand standard assets, but also the deployment of smart contracts for building a flexible ecosystem. I look forward to discussing a few more interesting use cases of ASAs and smart contracts for the halal ecosystem in the blogs to come.
To be continued..