There is no technical reason preventing Russia from creating its own blockchain-based system, blockchain provider Fuse Network’s CEO believes.
The adoption of blockchain is the right direction for Russia to solve its current settlement issues, according to an executive at Russia’s largest bank, Sberbank.
Blockchain technology has matured over the past few years to offer new capabilities that potentially enable Russia to create more efficient payment systems, Sberbank first deputy chairman Alexander Vedyakhin said.
On March 14, Vedyakhin took part in the meeting of Russia’s Federation Council on the budget and financial markets committee, highlighting the promising future of blockchain in Russia, the local news agency Interfax reported.
According to Vedyakhin, distributed ledger technology (DLT) is a great foundation for a new payment system due to its decentralized nature and privacy-enabling features. He stated:
“Because it’s a distributed ledger, there is no single point of decision-making, no center, no switch that can be turned off; everyone has records of everything, and there are special protocols that allow you to do this confidentially.”
Vedyakhin added that Sberbank is currently actively exploring the implementation of blockchain technology for payments. “We are confident that Sberbank and other colleagues from the central bank will find this solution,” he stated, expressing confidence that blockchain will become more relevant in 2023. The Sberbank executive said:
“Next-generation payment systems will be on blockchain.”
In his speech, Vedyakhin also noted that blockchain technology has rapidly evolved over the past few years, with developers managing to find solutions to issues, such limited scalability and limited privacy. These blockchain issues have been solved so far, he added.
According to Mark Smargon, CEO of the permissionless public ledger project Fuse Network, there is no technical reason preventing Russia from creating its own blockchain-based system.
“Major adoption by mainstream businesses and their consumers is right around the corner thanks to recent developments in scaling and privacy technology, notably on EVM [Ethereum Virtual Machine]-compatible systems, which have become the standard for experimentation,” Smargon said in a statement to Cointelegraph.
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He noted that fully online real-time technology for cross-border payment settlement is “only a matter of time,” with technology significantly maturing over the past few years. At the same time, Smargon questioned whether blockchain could enable economies to bypass international sanctions, stating:
“It needs to be clarified when this technology will become widely adopted and whether it will enable users to bypass international sanctions. Blockchain enables better transparency, and disintermediation is not only a solution for illicit activities.”
The news comes amid Sberbank finalizing its Ethereum-based decentralized finance platform, which it plans to trial by May 2023. Russia’s largest bank has also been working on an international settlement platform that would serve as an alternative to SWIFT. According to Sberbank CEO German Gref, the company plans to finalize its configuration in 2023.