Blockchain Russia - Rising Block By Block.

When trust is assured by a protocol rather than political or financial institutions, the capability of such institutions to leverage undue economic pressure is reduced.

Fri, Nov 10, 2017
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Never let it be said that Russians lack applied creative imagination. Hollywood-style PR and similar glitzy aggressive marketing while in the works, will no doubt catch up over time. It is no wonder given the brains and skills of the country that blockchain and the crypto-currencies universe have a distinct Russian flavor all the way to their roots.

One of Russia's pet peeves voiced many times over the years is the unipolar character of world relations led by the US and followed almost lockstep by the EU and other fiat currency-dependent countries. Trust has been quickly eroding, and not just between Russia and the US, but throughout the warp and weft of many nations and their societies especially in this “leaks-era”. A person or a nation can make themselves out to be a hero, a saint, say the ‘right’ words, define life from a pedestal, paint or film a rosy picture, but at the end of the day if you don’t “walk the walk”, falling from any pedestal can be a hard landing.

It is no wonder that throughout the world blockchain promises to rapidly fill a much needed void in the trust space, and not just crypto-currencies, but a range of organizational as well as functional elements affecting economics, societies and governments.

Blockchain has the power to guarantee trust worldwide and independently in anything, that can be digitally stored, including money, data, records, and identity. Blockchain rooted cryptocurrencies are appealing as they have the potential of operating outside of over-regulated financial systems and governmental control, be it the US, EU or any other nation and currency.

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When trust is assured by a protocol rather than political or financial institutions, the capability of such institutions to leverage undue economic pressure is reduced. Decentralized blockchain protocols are impossible for one state to sanction or hold hostage to any transitory policy or ideology.

The U.S. has been relatively subdued on the blockchain startup front, which has more to do with regulatory issues than a lack of companies that can innovate. While fully 25% of all global blockchain companies are from, or registered in the U.S., they are mostly cryptocurrency or bitcoin-focused; very few are tapping into blockchain’s vast potential for non-currency purposes. Compared to other world regions, there is a real shortage of U.S.-based blockchain startups working on projects in energy, insurance, health, supply chain, and the many other verticals that are being developed elsewhere.

With the rash of offerings now out in the market in the form of ICO’s and early starters like Bitcoin or Etherium making news, the bubbles are certainly seen as expanding. But are they really? It seems more likely that what is seen as the “cryptocurrency bubble” may be the real fear of change and the possibility of losing some controls by centralized regulatory institutions. That being said there are good reasons the Bank of America, JP Morgan Chase, Sberbank, SBI, ING and so many global others who are researching and developing blockchain applications. They recognize the warning sign: adapt, adopt or lose out in what may potentially be the largest shift of means, methods and wealth in history.

The regulatory dissonances, securities laws, and other restrictions across the globe have contributed to push many blockchain and crypto-currency startups to be registered in ‘untraditional’ places. This is part of a disruptive technology growth curve. As recently as this past April Japan ruled and now recognizes cryptocurrency as a legitimate form of payment. Russia has announced its intentions for a crypto-Ruble. Others are still grappling with what for many regulators is still an unknown, so how can they do their job and regulate when their understanding and comprehension view is just ramping up?

Regulation is part of all societies, so it makes sense to expect that those cryptocurrencies that fight eventual yet certain regulatory control will disappear, and those that accept such controls will remain. It is clear that blockchain and the vast changes that it has and will bring to the world is at the foundation of this ongoing disruption.

The Russian Government has taken a proactive, largely embracing approach to blockchain. It is seen as a valuable tool due to its inherent transparency. This can prevent day-to-day corruption by minor government functionaries with sticky fingers by reducing the opportunities and temptation to ‘skim a little’ in the sometimes-byzantine chain of steps currently taken to get something done. It can also enhance and streamline even the most top-heavy institutions.

Using blockchain technology has several benefits:

  1. Control of the value you own, there is no third party that holds your value or that can limit your access to it.
  2. The cost of executing a value transaction from and to anywhere in the planet is very low, fractions of a cent, which opens the door to efficient micropayments.
  3. Value can be securely transferred in a few minutes, not days or weeks.
  4. Since anyone at any time can verify every transaction made on the blockchain, full transparency is achieved and a clearly audited timeline.
  5. The technology is still a baby, and new tools are developing daily to improve the blockchain security stability while offering a broader range of features, tools and services.

First-mover offerings such as Bitcoin, Etherium or similar which are popular today can just as easily die quickly tomorrow. As with any real-time developing technology new applications are still being thought through or dreamed up. There still are several technological challenges to be overcome, and regulatory hurdles to resolve before probable user-sectors of the economy adopt this technology — or do not.

Some of these technological challenges are being worked through in Russia. I have cherry-picked just one of many as an example:

ARTAX (http://artax.blockchainlab.ru/) unites users into one single global peer-to-peer network for renting computing power, and provides the infrastructure for scalable autonomous smart contracts outside the bones of blockchain.

Their trend viewpoint is that the entire digital world will eventually abandon centralized servers for data storage and information processing, and will move to blockchain technology. Equally, all transactions in the network will switch to smart contracts, and calculations of all computing tasks onto virtual servers, with distributed decentralized data storage. Both of these trends ultimately provide an image of the decentralized supercomputer of the future.

The number of personal computers in the world is variously estimated at 1-2 billion with a further 300 million units supplied to the market each year, half of which are stationary. While the total number of servers in the largest providers of computing power, such as Google, Microsoft, Amazon, and similar, are by several orders of magnitude smaller. As such, Artax estimates the computing power that is in private hands to be ten times more powerful than what is available within major global corporations.

Artax’s project concept is to bring together users of personal desk and laptops, even entire data centers and marry them into a peer-to-peer global network, where each machine acts as a supplier of computing power. In doing so, we will significantly increase the supercomputer's power in comparison with currently available options while drastically reducing user accessing costs to the public, thus creating a new market niche which is profitable for both sides of the peer-to-peer network.

This currently small company is enabling the creation of a new rental market for global computing power that has tremendous growth potential, with autonomous smart contracting on the backbone of blockchain technology to make payments between users of this platform as transparent and comfortable as can be.

The disruptive force of this technology is happening in real time. As of this writing, the Russian government is setting up to test a blockchain-based land registry system to start early 2018. A better candidate than the land registry could not have been better chosen. Unwieldy, bloated, overstaffed, inefficient and hugely expensive. According to the Russian Government: "The use of blockchain will be aimed at increasing the availability of information on the property registry, guarantees of protection of property rights, as well as the level of citizens' trust in the sphere of turnover of real estate." This pilot project comes just seven months after Prime Minister Dmitry Medvedev asked two government ministries to start seriously looking into public-sector applications of blockchain technology.

Russia's announcement coincides with other national and regional governments announcing their own land-registration projects. Sweden, Ukraine, and the United Kingdom have all launched trials, along with two Brazilian municipalities and the Indian state of Andhra Pradesh. Small steps lead to huge strides.

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