Ethereum founder Vitalik Buterin recently spoke on the possibilities of applying his decentralized smart contracts platform in Russia, the proposed cryptocurrency ban in the country, and talked with representatives from the country’s central bank at a fintech event held in Russia’s “Silicon Valley.”
Ethereum Fuels Russian Interest
The event was held on May 16 on the outskirts of Moscow in Skolkovo — Russia’s equivalent of Silicon Valley — and attended by representatives from Sberbank, IBM, Qiwi, Kaspersky Labs, as well as Russia’s Central Bank and the Ministry of Telecom and Mass Communications (Minsvyaz).
It’s no secret that Russia’s largest commercial bank, Sberbank, been keen on the blockchain —the distributed database technology that powers Bitcoin. The bank’s IT strategy director, Katerina Frolovicheva, spoke on selecting Ethereum for managing and authenticating accounts as well as trade financing related projects, reported Fomag. According to Frolovicheva, this solution can not only benefit the banking sector but also make customs registration of goods and services more efficient.
Meanwhile, Sergey Solonin, co-owner and general director of electronic payment processor, Qiwi, lamented on the authorities’ opposition to cryptocurrencies — or what they refer to as “money surrogates” — and their proposed criminal penalties for users in Russia. Discussing blockchain without cryptocurrency isn’t entirely correct, said Solonin.
Buterin echoed this position in a panel session, explaining that the development of blockchain technology would be stifled in the country without cryptocurrency. He said:
A public blockchain in particular would require cryptocurrency for it to exist for two reasons. One, to provide an economic incentive for miners. Second, to limit the amount of transactions a person could send […] by applying economic restrictions such as transaction fees. So if there’s no cryptocurrency […] then at least public blockchains would not work. Private chains could if some kind of solution is developed but the blockchain as a system would be severely restricted.
The event also saw Russia’s central bank reiterate its openness to blockchain technology. However, the bank’s head of fintech, Vadim Kalukhov, explained that the main goal for the regulator is not to support the creation of a cryptocurrency. “In whole, we have a fairly positive view of the blockchain,” he said. “There are initiatives for and against it.”
Minsvyaz, for example, expressed a much more cautious approach. Vice minister, Aleksey Kozyrev, warned that it is necessary to first make sure this technology doesn’t create new risks for the government prior to developing blockchain solutions. Replying to a question on using the technology for import substitution, Kozyrev explained that there’s nothing that’s stopping Russia from developing its own platform similar to Ethereum instead of using Buterin’s “western” solution. However, he expressed doubts of using blockchain-based document verification for registering land property deals in the country.
Undeterred, Buterin proposed an alternative where Russian developers could use Ethereum to create their own solutions for import substitution, which could be particularly important considering that Russia is currently under economic sanctions from the US and EU.
Buterin Back in Russia
When asked whether he believes in the development of blockchain technology in Russia, Buterin tersely replied: “Yes, I believe in it,” reported CoinFox. He also noted that he’s impressed with how Russia’s blockchain community has caught up with the pace of innovation in the past four years.
— Dima Starodubcev (@21xhipster) May 16, 2016
Buterin was born in Russia but emigrated to Canada when he was just six years old and speaks Russian fluently. He currently resides in the Swiss town of Zug, a fintech hotspot that recently began to accept Bitcoin for public services and home of the Ethereum Foundation. In 2014, his Ethereum project began making head waves in the fintech space as he beat out Facebook’s Mark Zuckerberg to win the World Technology Award as well as a Thiel Fellowship grant for $100,000 USD.
Do you think Ethereum can get a foothold in Russia or will it develop its own smart contracts platform?