Russian Central Bank Wants to Separate Blockchain from Bitcoin

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Vadim Kalukhov, head of newly established Department of Financial Technologies, Projects, and Process Organization of the Bank of Russia, has confirmed the regulator’s interest for blockchain technology. In his interview with FutureBanking Kaluhkov, however, insists that terms “bitcoin”, “blockchain” and “distributed ledgers” shall be approached separately.

According to Kaluhkov, the Central Bank is closely following researches on national digital currencies carried out by other regulators.

“First of all, we have to agree on terms and separate such things as bitcoin, blockchain, and distributed ledgers. Bitcoin is a cryptocurrency based on blockchain technology. Blockchain is a chain of transaction blocks containing records on all transactions of the network. Distributed ledger is a technology of data or value exchange not necessarily based on blockchain. For example, Ripple protocol implies transaction-wise processing without any blocks,” Kalukhov said.

According to Kalukhov, the Central Bank has already launched a project to study distributed ledgers, which would feature analysis and development of approaches towards the technology’s application in financial markets’ operation. Simultaneously, several prototypes for run-in tests of particular models are being discussed. As Kalukhov hopes, a working prototype will be created within a few months.

As ForkLog reported earlier, Olga Skorobogatova, deputy chairwoman at the Bank of Russia, conceded using distributed ledger technology on Russian financial markets for creation of national digital currency. Vadim Kalukhov confirmed it was theoretically possible.

“We also closely follow researches carried out by other regulators in regard of national digital currencies, like FedCoin, RSCoin, and some others,” he said.

Kaluhkov, as one would expect from a spokesperson for a regulator, stated that closed blockchains have a great potential.

“Networks based on distributed ledgers imply various options of building. Such network may be both open and closed. Bitcoin, for instance, is an open network. R3, which is a popular topic now, is a typical closed network. Moreover, there are different network hierarchies. It may be in-house, adjoint etc. According to our estimations, closed and hybrid networks of distributed ledgers with strict identification and comprehensive rules have a great potential of development,” he said.

At the same time, Kalukhov believes, virtual currencies of open networks with anonymous access, prolonged confirmation mechanisms and automatic issuance bear some risks the Central Bank is unwilling to take. Among such risks he listed loss of confidential data, asymmetry of information on digital currency markets, high resource intensity and ambiguity of issuance consequences.

“Let me remind you that as early as January 2014 the Bank of Russia warned citizens and legal persons against using cryptocurrencies. By this we mean value vehicles that may be traded only digitally and that functions as means of exchange, unit of settlement, or value storage without being legal tender for any jurisdiction,” Kalukhov added.

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