V. Putin Wants to Use the Blockchain for International Transactions

Did the Russian President just suggest using bitcoin for international transactions?

Blockchain

This week, Vladimir Putin spoke at the VTB bank forum “Russia Calling”. He reminded that global economic relations are undergoing “radical and irreversible” changes due to the emergence of a “multipolar model”:

“What we want is to create a new model, a truly democratic model where honest competition among all economic players will dominate. However, Western elites are trying to slow it down, to artificially contain growth in what they consider the global periphery, which they have traditionally exploited and used as a resource, as a colonial rent. To achieve this goal, they resort to sanctions, for example by provoking conflicts in entire macro-regions in order to try to maintain their declining dominance.”

The Russian czar stated that these actions are undermining financial, trade, and economic links that have been decades old. The sanctions have also “discredited the financial infrastructure dominated by the dollar and the euro, transactions made through Western banks, and the international payment network SWIFT”.

“Let me remind you that one of the first decisions made by the West last year was to disconnect Russian banks from the Visa and Mastercard systems. The bet was that this would make it impossible to pay for goods and services. That payments would collapse and it would paralyze the country’s banking sector.

But what really happened? Individuals and businesses didn’t even notice the transition to the national payment system […]. As a result, we have stopped paying commissions to Western companies which have therefore seen profits disappear.”

Mr. Putin was pleased to note that international transactions in national currency are increasingly replacing the dollar, even going so far as to describe the Western financial system as “technologically obsolete.”

🇷🇺 #Dollar and #euro are losing their dominance while the system of settlements in national currencies is gaining strength, Russia's leader noted at the 'Russia Calling!' investment forum held in $Moscow.#Russia #Putin #VladimirPutin #West #SputnikVideo pic.twitter.com/AKqRXZpLEs

— Sputnik Africa (@sputnik_africa) December 7, 2023

Bitcoin for BRICS?

What technology could replace the SWIFT network and the dollar? The Russian president mentioned blockchain and central bank digital currencies:

“As for international transactions, we are increasingly turning to advanced solutions, including those involving blockchain and central bank digital currencies.”

It’s hard to tell if Vladimir Putin was only referring to CBDCs. Indeed, CBDCs are not blockchains. Was it a nod to bitcoin?

Furthermore, let’s remember that two years ago the Russian president stated it was conceivable to use bitcoin for payments, or even as a reserve currency:

“Cryptocurrency could be a unit of account, but it is unstable. To transfer money, maybe, but it is too early to consider trading in crypto for energy and resources. […] Crypto has the right to develop and we will see whether it can also become a store of value.”

Interview en octobre 2021. Vladimir Poutine ouvert au Bitcoin.https://t.co/LoBm9FZtRy

— Nicolas Teterel (@NTeterel) December 10, 2023

Russia, being very keen on gold, it is a safe bet that bitcoin will eventually be recognized for its true value: better than gold.

Bitcoin is a reserve currency as well as a payment system. Two-in-one. Stateless and uncensorable, it is, with the Lightning Network, the perfect replacement for the dollar/SWIFT tandem. It has now been waiting for its moment for fourteen years.

The CBDC system of the Bank for International Settlements would at best be just as centralized a redundancy as the SWIFT network.

Let’s finish by remembering that Russia is also working on a “retail CBDC” for everyday life. Caution is advised…