Expelled from the international monetary system since the start of the war in Ukraine, Russia appears to have a special relationship with cryptocurrencies. Now it’s shifting gears … and technology may be forced to follow.
An alternative blockchain platform
Since the start of the war in Ukraine, Russia has made cryptocurrencies a lifeline. While Ukraine itself relies on digital currencies and NFTs to fight on the ground, the land of the tsars is forced to find alternatives. Indeed, since its expulsion from the international monetary system and the end of the Swift system, Russia has had time to find a solution.
This time around, the crypto sphere appears to have won the conflict. In order to be able to trade with other countries again, Russia is launching its own blockchain platform. Developed by the Rostec group and more precisely at the Novosibirsk Institute of Software Systems, the CELLS platform will operate according to the principle of distributed ledgers.
In other words, during a transaction, all nodes check before reaching a consensus. This will allow the blockchain platform to process up to 100,000 transactions per second.
Open to all countries, CELLS allows you to store digital currencies on a wallet. Cryptocurrencies will therefore be useful for trading. More traditional international settlements are also possible. Thanks to this, each country will be able to pay in its own currency, and Russia will receive everything in rubles.
The digital payment system on the blockchain platform can be used as a real replacement for SWIFT, providing fast, secure and irrevocable transactions. The system will allow transition to settlement in national currencies, eliminate the risk of sanctions and ensure the independence of national financial policy for clearing participants
Extract from the press release by Oleg Yevtushenko, Executive Director of the Rostec Group
Diplomacy is involved … but the digital sector could play a new role
If the Rostec group promises secure transactions with no chance of losses, it may be that CELLS won’t be able to forget the Swift system. According to the Financial Times, the system is efficient, but the problem is more that of international diplomatic relations. In fact, the influence of the United States is great, and the platform has not yet proven itself viable.
About half of global payments are made in dollars. In addition to about 90% of the commercial financing. When instructions are sent through networks like Swift, many of these dollar payments have to be made between institutions that have no accounts between them. This means that a correspondent bank, presumably with operations in the United States and controlled by the US authorities, will act as an intermediary. Even for legal transactions, no one wants to risk antagonizing US authorities by processing payments for companies based in countries in conflict with Washington.
Excerpt from the Financial Times article quoting Claire Jones, on the advent of the Russian blockchain platform
Countries willing to use this platform could also upset the world order and create new conflicts. Some countries like France, still dependent on certain Russian resources, may need to use it if they can’t find an alternative. Another alternative would be for the European Union or the United States to create a competing platform. And, if the system works well, other countries may want to embrace the blockchain as well. The crypto sphere could therefore prove its full value!
Did it take a war for cryptocurrencies to finally be considered by governments? Either way, the crypto sphere will have a lot to do to keep its technology up to date. It is these initiatives, however, that allow for its development and democratization. If the platform works, the industry could have a bright future ahead of it.
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