Global blockchain is not suitable for every use case. Sometimes there is a local problem that needs a local technical solution. The IOHK team has a solution for it. It names Atala.
Atala is either a private or public distributed network created by the Cardano team. It aims at providing financial services to the people in developing countries. First of all, it is set to be implemented in Ethiopia, Mongolia, and Georgia. In Ethiopia, for example, a payment system for covering electricity bills is going to be developed, utilizing the Atala network.
Atala is a competitor to other projects such as Hyperledger or Corda. A while ago, these projects pulled the rug from many other crypto undertakings that attempted to develop similar schemes.
That said, their main project purpose is different as Atala is being designed in a way to be of practical utility and application for the governments in the developing countries, whereas Hyperledger and Corda are projects that oriented themselves towards corporate clients. Despite the fact, that Atala could be utilized for business clientele as well, such an environment is extremely competitive and relatively saturated. Conversely, the emerging markets are blue ocean markets, as far as the financial technologies (fintech) are concerned.
Curiously, Atala does not have the smart contract feature and what’s more, it, necessarily, does not have to be a blockchain, however, it can be easily linked to it, if it makes practical sense. The principal mission of Atala is to increase crypto-currency adoption and it is designed so it could easily deal with the user identity, payments as well as supply chain management.
Considering its unique features as well as aspirations, Atala will undoubtedly contribute to the growth of the Cardano project. The vantage point of the Atala is that not everything that happens on the local level has to be in public cloud storage or blockchain available for the whole world. The essential elements are, therefore, the transition during which the locally stored data are linked with the public network in case of an international transaction. Such transition and the subsequent public operations ought to be trustworthy, an individual partaking in that particular transaction does not necessarily have trust in a transaction that was initiated in a completely different country.
The seamless connection of systems means, that the systems in question are fully compatible, that is, have a secure way of mutual communication. One of the pillars of Cardano is interoperability, considering the real world around and the compatibility with currently used systems. Atala is a suitable solution for the environments, where such systems do not even exist and that is why the developing countries present such an opportunity for it. In western countries, there usually are more or less functional bureaus with their own information systems and, accordingly, the adoption of public distributed networks is not inherently needed. In one interview, Charles Hoskinson purported that it is indeed laborious and enervating to put something across in the western countries, while, on the contrary, he feels to be welcomed by the governments and businesses alike, with them actively voicing out their eagerness to cooperate.
If people used Atala locally, they simultaneously would gain access to the whole world through Cardano, which could foster a large-scale adoption of cryptocurrencies as a whole. One of the current problems of crypto-currencies lies in the fact that if people do not know each other, or, are not in the same place at the moment of transaction, it is complicated to successfully realize a trade. For example, if you want to order goods via the internet and pay in advance with a particular crypto-currency, what sort of guarantee do you actually have in terms of the goods being delivered, let alone warranty claims? Essentially, none. With fiat, it does actually work, but largely due to the fact that a legislative system is built around it.
Here, Atala represents a notable alternative as it will link a real person as well as a real product with the given transaction. Thanks to smart contracts, it is easy to lock the payment and only unlock the pending transaction after assuming the goods have been delivered.
Naturally, there may be problems, attempted or actual frauds happening in the beginning, but no start is easy or flawless. The real adoption can only occur, once crypto-technologies start sorting out real problems of ‘ordinary folk’ as well as assisting them in overcoming contemporary life obstacles.
There is a ‘popular’ opinion, that a private distributed network is nothing but a database. However, such assertions can easily be dismissed. Firstly, databases only have one local center that sustains the data, effectively becoming prone to be attacked and hacked from the outside. And naturally, a data change, if aggregated in a single location equals the ‘change of truth’. Secondly, a database is usually operated by a single person, with full admin rights. And even, if there were more admins, each and every one of them can change the data according to their likings. To make matters worse, if the data change is backed up to other nodes, then it occurs through the so-called ‘replication process’, i.e. particular individual data changes are copied within a time gap. Consequently, it is possible that data change at the same moment the server crashes, thus data gets erased with the change, included.
A distributed network, even a private one, operates without any admin, thus no one is granted the right to change data at a whim. Data can be only changes once a consensus is reached and subsequently, these are kept on all nodes. Here, reaching a consensus is a fundamental mechanics. Data (truth) or the state of the ledger can only change if a set number of nodes agree upon it. And, since with private solutions, the number of nodes is fixed, it is possible to set the transaction rules in any desired way, even demand all the participants to agree on the change in question. So, for example, if there are ten banks operating in the given country, who seek cooperation but do not trust each other, they could utilize this solution with all the benefits. Atala is designed for it. Cardano will then be used on the international level.