Blockchain Could Help Russia Close Gap With Advanced Economies

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Russia appears to have placed Blockchain technologies on top of the list of its priorities lately. Ethereum’s inventor, Vitalik Buterin, had a conversation with Vladimir Putin last week. Putin seems to have endorsed such developments that could bring an answer to many of the ills plaguing Russia.

Oil dependence

Russia's economy is too reliant on oil and it is preventing the ruble from becoming a stable currency. As the price of an oil barrel fluctuates, so does the Russian ruble.

To counter this heavy dependence on energy exports, the country has long been looking to diversify its economy and to monopolize a new area not yet dominated by superpowers such as China and the USA.

Potemkin tech villages experience

The Russian government first began opting for nanotechnologies in 2007. Rusnano was created as a government-owned joint-stock company, and the former Kremlin Chief of Staff Anatoly Chubais was granted its management keys.

Throughout the years, the venture invested in various projects but wasn’t successful in becoming the player that would offer Russia a major leap.

The next big attempt was the creation of The Skolkovo Innovation Center in 2009. Set as a world-class technology incubator, it was intended to become one of Silicon Valley’s main rivals in the areas of IT, biotechnology, space and nuclear and energy efficiency.

However, this ambitious plan struggled with massive brain drain and corruption that made it stall in the thirteenth rank in the Compass Global Startup Ecosystem Ranking, performing far behind other top innovation hubs.

The search for a technological leap to close the gap between Russia and more advanced economies resumed when Putin became president again in 2012.

Russian investors showed a strong interest in the Hyperloop project, a kind of train in a tube that can reach speeds of 1,000 kilometers or 700 miles per hour.

The state-owned Russian Direct Investment Fund even acquired a small stake in the company. However, the project doesn’t have Russia on its list of priorities and is focusing on developments in other regions such as the United Arab Emirates.

The Ethereum opportunity

Vitalik Buterin offered Putin the possible use of Blockchain technologies in the Russian government and financial sectors for its transparency and anti-corruption capabilities. Putin seems to have endorsed such developments that could bring an answer to many of the ills plaguing Russia.

The country could also become the first one to develop its own digital currency, and perhaps the move is already in the making.

"Regulators of all countries agree that it’s time to develop national cryptocurrencies, this is the future. Every country will decide on specific time frames. After our pilot projects, we will understand what system we could use in our case for our national currency," announced Olga Skorobogatova, chief deputy of the Bank of Russia.

A nation-wide Blockchain experiment might be just another wrong door to open, but it is very like to boost the country and give it a cutting-edge technology impulse.

It would be interesting to find out how Putin actually received Buterin’s ideas apart from the Kremlin’s PR strategy, and what actions will be taken following their meeting.

Meanwhile, the actions undertaken by other economic superpowers should also be closely monitored, as they are very likely to react to what might give a considerable advantage to Russia.

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