Fintech expert: Blockchain adoption in Russia will follow the Asian model

March 31, 2017 - Blockchain, Fintech
Fintech expert: Blockchain adoption in Russia will follow the Asian model


Alexei Blagirev, Director of Innovations at ‎Bank Otkritie, told CoinFox about his experience with distributed ledger and the prospects for the technology in Russia.

CoinFox: How did you get familiar with blockchain?

Alexei Blagirev: Some time ago, I worked closely with Alexey Arkhipov of QIWI on a “big data”-related project. It was spring 2016, and Alexey was already a renowned blockchain enthusiast and has had some experience in the development.

At that time, I was directing a large risk management and fraud prevention AML project. We got an idea of a fraud-prevention data exchange system based on blockchain, which would help unify users profile data and blacklists between partner banks. Specifically, we would focus on death records. There is no public register of deceased people in Russia, and it is hardly possible to verify if a person is dead, which opens an opportunity for identity theft. We realised that it would make a perfect case for blockchain: we have a potential area where there is an unresolved problem, no trust and multiple participants.

We chose Ethereum because it was one of the few blockchain platforms already in use with real transactions and it supported smart contracts. It took us 1.5 months to complete the prototype, in June 2016, and we presented it to the Central Bank, where we had just joined an innovation task force. It culminated at the Finopolis fintech forum, where we showcased the project to Sberbank’s head Herman Gref and President of Tatarstan.

We realised that we could use our prototype to circulate data between banks concerning not only frauds but also arrears. But the prototype had its issues from the point of view of legislation. It became clear that to advance, blockchain must be separated from cryptocurrencies.

CF: How do you see the development of blockchain in Russia?

AB: The paradox is, the stable model of development for the blockchain community implies it to be of a somewhat enclosed nature. We should have a number of isolated groups representing and developing independent concepts, and the more such groups are there, the more stable the system. Most likely, we will follow the Asian model: there will be certain companies acting as trendsetters that provide others with solutions to use.

Within a year, we progressed from an anticipated ban of the technology to its promotion on the state level. One should hardly expect a straight-line development here; the progress is going to be non-linear and the result would be a complex framework. But to succeed, everyone should realise that effective implementation of this technology requires independent development and trial of concepts by enclosed groups.

CF: What is Masterchain and how will it operate in Russia?

AB: We are now at the stage of creating a nation-wide distributed network called Masterchain. Otkritie Bank plays its role in the project; details to be revealed soon. There are many theories of what Masterchain should be, and we are discussing the best choice.

What is certain, there will be a specialised API (smart-contract) for companies to communicate between themselves and with the central bank on transaction services, trade financing, accreditives, notarial actions and so on. Take, for example, KYC (know-your-customer) schemes. Many organisations are now getting interested in them in the context of managing users’ billing details. Instead of asking from a customer their bank details every time, they could create a single synchronised register and share it in blockchain for mutual settlements.

All this is interesting and non-conventional but implies some restrictions where personal data is involved and requires standardisation.