Following the news that Sberbank, Russia’s largest bank, has joined the Enterprise Ethereum Alliance, the bank has become one of the first to use the blockchain technology to initiate a transfer, which was concluded within a few seconds. It used the blockchain platform which is provided by IBM. According to the bank, it used its own infrastructure. The other entities who participated in the transaction included IBM, Megalabs, Alfa-Bank, Megafon.
According to the managing director of the bank, this is a historic step by any bank in the Russian Federation as it was the first to initiate the transaction which was concluded by the blockchain technology.
The managing director further added that the main advantage of using this technology is that the payment got concluded within a few seconds. This ensures that the amount was deposited to the account of the receiver almost in real time which is not the case in traditional payment systems.
The blockchain technology is specifically designed to initiate such transactions and can include them in real time. This is done with the help of smart contacts which verify the information and thereafter initiate the transaction.
This is a big step considering that the Russian government is not in favor of blockchain based transactions or cryptocurrencies. It remains to be seen whether some of the other banks would also initiate such transactions and adopt blockchain to a greater extent in the traditional finance and banking system. For now, however, Sberbank has taken the 1st step and it remains to be seen whether it is followed by more regulations by the Russian government or whether this would encourage other banks to use the blockchain as well.
Most of the people might not be aware that blockchain technology can be isolated from cryptocurrencies. Most of the governments all over the world are against cryptocurrencies and not blockchain technology. That is why the response by the Russian government would be pretty interesting and most of the people would like to wait to see whether it encourages the use of blockchain technology but not cryptocurrencies or whether it discourages the use of blockchain technology as a payment mechanism as well. If indeed, the Russian government does not have any problems with the blockchain technology, it would not take any further regulatory actions against the bank or draft the new rules in order to discourage the blockchain technology. However, in case it does so, it would send a signal to most of the banks to avoid blockchain for transactions.
Mahesh Sashital is cofounder of Smartereum.
He was previously Vice President at J.P. Morgan. He has over 15 years of experience in software engineering at various Fortune 20 companies. He has a Bachelor's in Engineering from the University of Mumbai and an MBA from the University of Texas-Austin.
