The blockchain scene in Russia is growing all the time, with bigger and bigger players making use of the technology. Sberbank, the largest Russian bank, has successfully used blockchain technology to close a $15 million transaction with Trafigura, the third-largest physical commodities trading group worldwide.
Sberbank bought accounts receivable in a pilot transaction supported by the Hyperledger Fabric platform. The bank’s first deputy chairman Alexander Vedyakhin revealed the news during the Eastern Economic Forum in Vladivostok, Russia. The technical details were made public soon after the announcement.
Russian blockchain initiatives appear to be thriving thanks to an increased interest in the technology by most of the country’s large organisations as well as government agencies. However, the Russian government continues to remain somewhat guarded when it comes to cryptocurrencies.
$15 million worth of accounts receivable
The details of the pilot transaction weren’t kept under wraps for too long. The Singapore-based giant Trafigura sold $15 million worth of accounts payable to Sberbank. The debt belongs to one of Trafigura’s clients from Turkey.
The transaction was concluded through the blockchain-based platform Hyperledger Fabric. Sberbank took advantage of Fabric’s ability to segment data and maintain the confidentiality of certain parts of the network.
On the surface, the transaction may seem like just another typical financial agreement. But this is a significant milestone for the blockchain industry. It shows how smart contracts and blockchain technology can speed up international transfers. It also provides proof that businesses can benefit from blockchain in real-life scenarios.
This particular Russian blockchain project developed by Sberbank is a system that uses the Aurelia framework and the Scala language to write smart contracts. The bank also piloted a system that enables the validation of new blocks of complete transactions in one second.
Sberbank also owns a cloud-based solution that complements the system, called SberCloud.
‘From one day to one hour’
The transaction between Sberbank and Trafigura was completed through a smart contract hard-coded onto the blockchain. This type of transaction shows how efficient blockchain technology can be for international trading.
Vedyakhin stated that the new initiative by Sberbank had increased the efficiency of document flows and completed the transaction in one hour instead of one day.
According to the chairman, the pilot transaction between Sberbank and Trafigura could even redefine global trade. He stated:
“Our blockchain pilot project records every step of the transaction: request for the purchase of receivables, application processing and its approval with the bank, issuing the bank’s offer, confirmation of terms by Trafigura, and settlement of the transaction.”
A Trafigura spokesperson confirmed that the transaction was completed without any friction. The two companies are now planning to collaborate and use blockchain technology for other use cases.
The Russian blockchain ecosystem
Russia’s largest bank placed a bet on blockchain, and the investment seems to be paying off. The Russia blockchain ecosystem proves that this technology is no longer something of the future, but a viable solution to today’s challenges.
Using smart contracts to buy debts isn’t the first time Sberbank’s team of developers has used the blockchain for global trading either. Last year, Hyperledger Fabric was used to complete an off-exchange repurchase agreement deal between Sberbank and Interros, a Russian investment company.
Russia’s largest bank has quite a history with blockchain technology, in fact. Last year, Sberbank claimed to be the first to complete a three-way repo deal using smart contracts and blockchain.
Besides speeding up transaction times, blockchain technology also reduces working hours for each transaction as well as the risks that come with international transfers. With all these advantages, Russia’s largest bank has decided to expand to other partners willing to use blockchain for transactions.
Russia is getting more interested in blockchain technology
Despite its unclear stance on cryptocurrencies, Russia isn’t missing a chance to dive into blockchain applications. From large businesses to government agencies, there are many stakeholders interested in blockchain technology and its disruptive features.
The Russian central bank, for instance, backs the Fintech Association, an organisation of which Sberbank is a member. The consortium functions on an Ethereum-based network and aims to study and implement distributed ledger technology to come up with practical solutions within the industry.
Sberbank was also part of the Russian project Masterchain, although it dropped out after the project failed to meet expectations. Sberbank’s lab has focused on its own projects instead, with significantly better results.