The Russian Federation is currently undertaking scientific research to see how blockchain technology can be effectively implemented in both the public and private sectors.
The government thinks blockchain, the underlying tool behind cryptocurrency, can be one of the stimulus to its economy system. Russia is remembered for having pioneered the very first global carbon credit transaction in 2017 using distributed ledger technology (DLT).
According to the data by the World Bank, Russia’s GDP is estimated to gain by 0.6%, and the consumers plus the investment demand is expected to be highly affected. The country wants to use blockchain so as to achieve its goal of growing the national economy by 2.8% in 2022.
There are many blockchain-related scientific and innovation developments and its practical implementation especially in the state institutions, economic fields and other state-owned businesses.
Research is now being done to determine the current tendencies in the development of DLT. Research is also being done to provide characteristics of the size of blockchain market in the country, to find tendencies in formulation of a legal basis for DLT regulation and the processing of cryptocurrency in the country, to unveil the challenges and peculiarities of cryptocurrencies turnover in the country, to ascertain snags and perspectives in the expansion of blockchain market in Russia.
State-owned companies are created by the Russian government to grow the industrial fields. According to the data by Russian governmental statistics agency, Rosstat, around 529,300 registered enterprises are partly or wholly established by the state. There are more than 100 registered legal entities that are physically involved in the operations in the Russian blockchain market.
At the time of writing, the market size of blockchain related business operations in Russia is projected at RUB 2 billion ($28 million USD), which is 0.018% of a percentage point of the country's 2021 GDP ($1584.22 billion USD).
Having realised the potential of distributed ledger, the Russian government has even launched its own registry called masterchain. While employing the basic principles of the technology, the new chain is adopted to the peculiarities of cryptography rules and principles adopted in the country. Currently, it is used in the banking industry for storing and transferring data.
The system was first presented in 2016. Since 2019, it has been passing all necessary certifications with the Russian regulators in order for the solutions to comply with the established standards. Since Masterchain is a closed network that is controlled by the watchdogs, it is considered to be less decentralized than blockchain. Nevertheless its developers from the FinTech Association state that the network can boast of greater security due to such a peculiarity.
Despite a big number of working blockchain and cryptocurrency solutions, the market in Russia is still in the early stages of development. Numerous DLT-related initiatives are expected to be implemented in 2021-2022.
One of the major hindrances faced by the blockchain industry is the lack of public information about the blockchain tech schemes. However, this challenge is expected to be addressed since several projects are now participating in the inventing solutions plus services related to the public sector, oil and gas, energy and the financial sector of the economy.
Problems being faced by the Russian government include the absence of clear regulatory processes, guidelines for the blockchain technology industry which bound the capital raising knacks of DLT-related enterprises, and business.
Some of the projects expected to be undertaken include creating DTL-based archives for government data, rolling out a digital platform that will allow the exchange of information and copyright accord for most government ministries.
The government needs to introduce new effective regulations if it wants to compete favorably with other countries such as China and America as far as blockchain technology is concerned.