Russian Banks Use Ethereum Blockchain
The Ethereum blockchain is presenting numerous possibilities for the Fintech sector and opening doors within the banking industry.
Within the past few years, the banking industry has been looking for ways to lower costs and make transactions easier and more streamlined. Bitcoin’s underlying blockchain technology seemed the best way to achieve these goals, but its scalability remained a concern.
Enter the Ethereum Blockchain
Just a few days after Ethereum was launched, UBS and Barclays were the first two banks to announce that they were experimenting with its technology. The Ethereum blockchain presented more promise and scalability than the Bitcoin blockchain did. Soon thereafter, other banks began experimenting with it and creating their own private blockchains to produce faster and transparent domestic payments. The Royal Bank of Scotland (RBS) announced Emerald, a private blockchain to produce faster and transparent domestic payments.
On October 5th, 2016, the Bank of Russia executed their first prototype built off the Ethereum technology called Masterchain.
“The Masterchain is a networking tool for the market participants using the distributed ledger technology. It allows prompt confirmation of data actuality with respect to a customer and a transaction as well as fast creation of various financial opportunities for the market participants to provide game-changing products and services to their customers. Besides, the Masterchain makes it possible to speed up communication between the counterparties and assure required confidence in financial transactions.”
Their prototype was viewed by the following participants- Sberbank, Alfa Bank, Tinkoff Bank, and Qiwi, a Russian payment service provider.
The Bank of Russia and the market participants continue to be active in exploring and developing new advanced technologies for the Russian financial market. These joint efforts previously led to the generation of a technical prototype for financial messaging, based on the distributed ledger technology. The new Masterchain was the next step along these lines.
‘The creation of prototypes and joint inquiry of applicabilities help both the regulator, and the market participants understand outcomes, estimate capacities, mitigate the risks of using different technologies, and decide on follow-up actions. This is a good groundwork for onward progress. We would suggest that the Masterchain will be under way under the auspices of Consortium for fintech development being launched by the Bank of Russia. We are planning to consider the use of the Masterchain prototype as a component of the new-generation financial infrastructure in the future.’ – Olga Skorobogatova, Deputy Governor of the Bank of Russia, says.