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Blockchain Technology Gains New Applications in Russia

As is the case in many nations around the world, the blockchain space in Russia has seen its fair share of turbulence over its brief history, spurred by the mercurial actions of a skeptical business community and a restrictive federal government. However, initial trepidation about the potential use cases in the Russian market is beginning to evaporate, and major blockchain initiatives are breaking ground into a vast economy.

In an interview with Distributed.com, Russian native and co-founder and chief legal officer of Crypto PR Lab, Maria Prusakova, offered some insight into the blockchain and cryptocurrency climate of this vast nation.

The Russian Market for Cryptocurrencies and Blockchains

Simply put, the position of cryptocurrencies in Russia seems far more troubled in its history than the broader applications of blockchain technology. Although blockchain technology offers many possibilities for performance enhancement in a variety of fields, Prusakova stated that the friendliness afforded to cryptocurrencies in Russia is much less extensive, with the situation changing in under a year, from “officials proposing that cryptocurrencies should be banned and their users imprisoned to suggesting legalization is in the cards.”

Obviously, this shift is hardly a complete reassurance of asset security for any large-scale investor.

And yet, the primary hostility toward the use of cryptocurrencies apparently stems from their unsupervised and decentralized nature, especially considering the difficulties that these conditions provide for taxing income and responsibly managing electricity usage. For example, Moscow was actually the city with the second-highest number of initial coin offering (ICO) launches in the world in 2017, making it clear that, at least in this economic sphere, “entrepreneurs have a very positive attitude towards using blockchain cases to raise money for their ventures,” per Prusakova.

Following this trend, it seems like Russia’s model for the future of blockchain investment may strongly resemble China’s, giving some insight into what blockchain development may look like in developed nations with tight control over their own internal economies. If nations such as these two titans both favor state-run blockchain initiatives while underselling the usage of cryptocurrencies, it could spell serious opportunities for investment into a field far less immediately cutthroat than that of digital currencies.

New Far-Reaching Use Cases

The most significant of the new Russian initiatives is the announcement that the nation’s military is launching a blockchain research lab. Although the highest priority for this lab’s first projects will be strictly exploring military applications, e.g., protecting infrastructure from cyberattacks, an initial press release noted that a variety of other projects are also planned for future exploration.

However, this is not to imply that cryptocurrency investment in Russia is completely stagnant. Although the federal government hardly seems liable to make a serious investment into the development of cryptocurrency to the same extent as this blockchain research initiative, firms are still taking advantage of the relative leeway that they have been afforded in recent months.

For example, June saw several prominent Russian banks launch experiments with hosting and trading in cryptocurrencies, allowing Russians to build portfolios of the six most internationally stable cryptocurrencies. Of particular note is the fact that, although the participating banks are private institutions, the article mentions that the central, state-run Bank of Russia is supervising the endeavor with its own regulatory platform.

This amount of limited interference may be just enough to introduce a larger amount of Russian citizens to the cryptocurrency space. As hype builds up for the possibilities of large and costly blockchain systems in nations such as Russia, requiring many different investors and contractors for construction, certification and maintenance, it is important to remember that a tepid federal response toward cryptocurrencies can still constitute a substantial opportunity.

The Evolving Worldwide Blockchain Space

As a general rule, it is a positive for blockchain technology advocates when distributed ledger development is successful anywhere, if for no other reason than that this success provides definitive proof of the economic applications of blockchains. That being said, the successful launch of widespread Russian blockchain initiatives could transform the space entirely.

Although most of the development of non-Western blockchain and cryptocurrency initiatives seems to happen in Asia, Prusakova maintains that Russian firms have displayed a great interest in bringing this technology into Russia. Although, she claims, the government is in many ways dragging its feet with the full usage of blockchains, “We see a tendency amongst major Russian instructional players … to promote legislative changes that would be relevant. This process is, of course, time consuming, however … we expect developments in this area in the near future.”

For those looking to expand into a largely untapped field of blockchain investment, it would serve well to keep an ear to the ground for future developments regarding the Russian space. It may soon prove a lucrative prospect.


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