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Russian Central Bank Tests Transactions on Ethereum Blockchain Prototype ‘Masterchain’

Last Updated March 4, 2021 4:51 PM
Samburaj Das
Last Updated March 4, 2021 4:51 PM

The Bank of Russia has developed and tested on an Ethereum-based blockchain prototype called ‘Masterchain’ for financial messaging, to be used by banks in Russia.

The Bank of Russia, the country’s central bank, has developed a technical prototype called ‘Masterchain’. The prototype is based on distributed ledger or blockchain technology for the Russian financial market, an announcement by the bank revealed yesterday.

The blockchain platform prototype was developed for financial messaging between banks in the Russian financial system and was put to the test. The announcement added:

The biggest banks of Russia have made the first test transactions in the Masterchain.

Participating in financial institutions include Sberbank, Alfa-Bank, and Tinkoff Bank (which confirmed usage of Ethereum’s technology) and Russian payments operator, Qiwi Group.

The ‘Masterchain’, as explained by the central bank, is ‘a networking tool’ for participating members using blockchain technology. The platform enables for “prompt confirmation of data actuality” to a transacting customer. The innovation also makes instant communication possible between counterparties among the platform, while assuring confidence in financial transactions.

Beyond the technical talk, it is interesting and even unexpected to see the Russian central bank develop its blockchain solution (everybody is doing it these days), based on an open-blockchain platform like Ethereum.

Indeed, Olga Skorobogatova, Deputy Governor of the Bank of Russia, sees possibilities for the ‘Masterchain’ to be leveraged across the financial industry, beyond banking.

She stated:

The creation of prototypes and joint inquiry of applicabilities help both the regulator, and the market participants understand outcomes, estimate capacities, mitigate the risks of using different technologies, and decide on follow-up actions. This is a good groundwork for onward progress.

We would suggest that the Masterchain will be under way under the auspices of Consortium for fintech development being launched by the Bank of Russia. We are planning to consider the use of the Masterchain prototype as a component of the new-generation financial infrastructure in the future

Russia’s Blockchain Embrace

For a country that has seen its authorities and regulators take a notably hardline stance against bitcoin, the cryptocurrency’s underlying technology – the blockchain – has seen favorability.

In February 2016, the Bank of Russia established a ‘working group’ to study blockchain technology, in an effort to understand and look for the viability of its real-world applications in the Russian financial market.

By April, a report revealed that the Central Bank was considering allowing banks to record and store data of all their transactions on a blockchain.

Come July 2016, the Bank of Russia had planned and set up a coalition of banks that counted as Russia’s first blockchain consortium.

 Featured image from Shutterstock.