Blockchain is emerging as an alternative to SWIFT

The outbreak of hostilities between Ukraine and Russia was worth the second of these countries becoming the target of more sanctions. One of the strongest was the blocking of Russian banks from the global payment messaging network (SWIFT). Moscow has responded with various alternatives to that battle, the latest of which is based on blockchain.

It is a project carried out by experts from the competence center of the National Technological Initiative at St. Petersburg State University. It aims to become a real alternative to SWIFT, and set itself up as a completely neutral interbank payment system. In this way, no member could be excluded because of ideology or political approaches.

For this purpose, the developers relied on the blockchain, which enables completely decentralized data processing. As explained by the project managers, the platform is ready for use in the test phase. The first tests involving local banks in the Eurasian country will begin shortly.

The blockchain is emerging as an alternative to SWIFT

Regardless of the realities of the war in Ukraine, the power of the new technology is clear. The interest shown in blockchain could lead to it becoming a real solution to the problems of the old centralized institutions. Its qualities of security, transparency and fairness can make it a very useful tool.

Meanwhile, Russian developers announce some details about their project. “The pilot version of the decentralized interbank financial messaging system is ready for testing and can be used in banks,” they explain as quoted in local media. The big advantage of this new proposal is that it is shielded under the powerful distributed blockchain technology, they emphasize.

For his part, the director of the initiative, Alexander Kireev, confirmed that significant preliminary tests have already been carried out. In all these, the platform would have performed acceptably and would already be ready to move on to the next stage with real banks. Among the features, the specialist said that the scalability exceeds 25,000 messages per second on a node.

Likewise, the capacity of this blockchain alternative to SWIFT could be increased in the future, according to Kireev. The platform will have the ability to scale and integrate new financial institutions from anywhere in the world. Russian authorities take a keen interest in the development of this type of project in order to find mechanisms to circumvent Western sanctions.

It is impossible to disconnect participants

Another feature that stood out from the platform is that the participants in it will have equal power and rights. In such a way, no one can disconnect from each other based on political or ideological differences, as happened precisely with Russia, says the University. The blockchain, from this point of view, would have corrective properties.

The futuristic technology will enable more robust, secure and reliable financial messaging, the platform’s creators point out. In the financial payment network created by the St. Petersburg institution, private and state-owned banks wishing to do business with Russia and other countries sanctioned in traditional mechanisms can participate.

With the help of blockchain, important options are emerging. This is spoken in the plural, since this project is not the first of its kind designed to replace the global SWIFT payment system. The first of these was recently created by the technology giant Rostec. This company announced its platform last June and aimed to facilitate business between Russia and its trading partners.

On the other hand, next to the blockchain, there are also other Russian projects that are used as an alternative to SWIFT. The most prominent of these is the System for Transferring Financial Messages (SPFS). It must be taken into account that this is more traditional (technologically speaking) and was created in the middle of the first phase of tensions between the Kremlin and the West in relation to Ukraine in 2014.

At the time, civil war broke out in Ukraine and three provinces broke away from that nation. Among these was the Crimean peninsula, which became part of Russia since that year. The other two were Lugansk and Donetsk, which declared themselves independent republics.

Good technology or bad technology?

Blockchain technology is highly effective in fulfilling the missions entrusted to it, regardless of their programming. In that sense, it can serve the most philanthropic purposes as well as the most sinister. That situation is due to the fact that it is a decentralized technology and one of the few or probably the only truly objective of all those that exist.

“Blockchain is not a bad or good technology. It is one of the most objective developments in history.”

As a result, different countries and institutions put it to use to suit their short- or long-term interests. The US, EU and other Western nations depend on it for large projects in data and payment systems. At the other extreme, countries that are not very similar in perspective to the West, such as China or Russia itself, see blockchain as something very useful for their own projects.

In this way, blockchain is presented as a vehicle, i.e. an intermediary between states and their goals. If one could qualify bad guys and good guys, one would have to point precisely to the latter and not to the technology that simply acts as a messenger.The fact that Russia wants to achieve its goals with blockchain is a matter for Moscow and not for blockchain.

If the Kremlin manages to avoid sanctions with these new blockchain-based platforms, it will not be the technology’s fault. The problem will be that the new technologies move towards decentralization, leaving behind the old technology structures based on the power of a few actors, who have decision-making power over who can participate in them and impose conditions.

Internal use of cryptocurrencies prohibited

In parallel with the use of blockchain for foreign trade purposes, Russian authorities want nothing to do with it behind closed doors. Recently, it became known that the country’s president, Vladimir Putin, signed a decree banning the use of cryptocurrencies as a means of payment for domestic trade.

The Prime Minister’s decision comes after a long debate between representatives of the government and the central bank. The visions of both sides were full of perspective contradictions about the benefits and dangers of digital currencies for the financial system of the Eurasian country. Still, Putin’s vote was needed to solve the problem.

In this way, Moscow’s duplicity against this technology would be completely sealed. Internally and when using cryptocurrency, blockchain becomes an enemy, but for external use it is an ally. Any use of cryptocurrencies for payments for products, works or services provided is now outlawed.

It should be taken into account that Russia is one of the countries (second according to the UN) with the highest use of cryptocurrencies by its citizens. In the same ranking, they would share the podium with Ukraine and Venezuela. As reported by INVESTOR TIMES, 11% of Russian citizens use cryptocurrencies to trade or save. Meanwhile, the other two nations have 12.7% (Ukraine) and 10.3% (Venezuela).