Bitfury is a transnational blockchain company, well-known worldwide as the largest industrial miner outside China and a developer of different hard- and software solutions to work with Bitcoin blockchain.
It is an international marketplayer branching their product on a national level in accordance with mining industry legislation.
In a conversation with Bitfury principal representative in Russia, we talked insights on “product strategy.”
In December 2017 Bitfury has opened its seventeenth international office in Moscow. Dmitry Ufaev was appointed as the director-general of the Russian department.
I met with him on the 58th floor on the Imperia Tower during the “Future in the City” conference. In the midst of the great white Moscow clouds we talked less about mining global business and more about features of work in Russia.
DU: Inasmuch as there is no legal certainty with cryptocurrency mining in Russia right now, we concentrate on our software solutions promotion.
Dmitry has mentioned three products their Russian department is focused on.
- Exonum – a framework with an opened source code for private blockchain building, sought-after solution for governmental structures and big businesses;
- Crystal – a service for tax authorities, strong structures and financiers built to analyze transactions inside a blockchain network and spot suspicious activity – from viruses-extortionists like WannaCry or Petya to wallets that are connected with DarkWeb transactions;
- Peach – a third-layer protocol for the Lightning Network that makes node management more convenient and reduces transaction costs.
DU: Our priority focus is Exonum, which we market to the government and top-500 corporations. It can be used by the smaller projects as well, for example, if their users want to work with their own private blockchain, not an open public one.
Although Exonum can be downloaded from GitHub, its licensed version, has special useful characteristics that make it a single-source solution for the governmental sector, according to Dmitry.
DU: In the licensed version, the solution offers a customised version called Exonum Enterprise. This version consists of additional modules that simplify the system’s deployment, its adjustment and monitoring. Moreover, this version has a module that includes Russian cryptography, which is critically important as the Russian legislation forbids the use of uncertified cryptography.
Speaking of competitive advantages of Exonum, Dmitry also mentioned other platforms that are less successful in the field of governmental implementation of blockchain.
DU: The various government agencies are actively using the different platforms, including Ethereum, but mostly for pilot projects.
It is rather hard to imagine an uninterrupted functioning of the government system on Ethereum, primarily due to the public character of this blockchain, that can be overwhelmed by other users’ activity.
Then we moved onto blockchain-based education. Now Bitfury provides its Exonum solution to Synergy University helping create a trusted system of scoring and diploma awarding.
DU: We decided to embed the product in three stages. Right now we register the fact of the graduation (award of the diploma), and it is the first step in our collaboration. With the second stage, new features, connected with grades and information sharing, will appear in the system. For example, a student from “Synergy” will be able to give his employer an access to the system to review his grades or ascertain the fact of his graduation. During the third stage, we plan to make all the Synergy-organized exams blockchain-based. In this case, all of the answers given by the student during any exam will be registered in the blockchain along with the final grade. The possibility of retaking the exam will be preserved, but the fact of the repeat exam will be also registered: it won’t go unnoticed. Any fact of changes will be registered in the system. This measure will help to completely eradicate corruption among teachers and scholars and get rid of any personal factors, such as personal grudges held by the teachers or pressure on the students, that may influence the exam results.
Dmitry pointed out that almost any university would be interested in such a solution.
DU: Right now, we are working with “Synergy,” Russia’s largest private education holding. On the basis of this case we’ll gain the necessary expertise, on the basis of this expertise a solution will be born, and then we’ll be able to offer this solution to the other educational institutions.
We also covered an issue of blockchain-based registration of the land rights in Bermuda. Dmitry clarified it wasn’t the first case to shed light on the matter. Republic of Georgia pioneered the realization of the right becoming the first case of blockchain implementation in governmental sphere. It is now taught by Harvard Business School as an example of national blockchain use. Coming back to Bermuda.
DU: Last year’s Hurricane Katrina practically wiped away all of the island states from the face of the Earth. All of the paper-based archives and part of the data centers were destroyed. Consequently, it is clear that the sea-locked states have a real need for decentralized and geographically diverse data storage facilities with an appropriate level of security. The land ownership rights is a particularly sensitive category: when people know that their property rights are protected, their lives become much more comfortable.
Digital rights, property rights, intellectual property rights are all ideal for blockchain implementation.
For those countries that are interested in transparency and avoidance of any manipulations with the public records, state-run registers on blockchain should be the priority direction for implementation of this technology.
I asked how can security and reliability of private blockchain be checked in, for example, governmental sector.
DU: We increase the reliability of a private blockchain with the Ancoring technology. Once a day the system makes a “cast” of its status (it’s called Ancoring in Exonum), and the cast is saved in a Bitcoin blockchain transaction. Thus, any outside observer, analyzing the records in the Bitcoin blockchain and comparing them with current state of the private government-controlled blockchain, can notice at which moment the system has been compromised.
At the end we went back to the legislation issue in Russia, highlighting a special mining tax by initiative.
DU: In general, we believe that regulation can be useful for the market players, but it shouldn’t entail an additional mining tax. Mining is no different from the other ordinary business activities. In this context it is important to understand at what point should the mining activity become subject to the entrepreneurial tax. There’s a need for legal explanation of what cryptocurrency and its mining are, how it all functions, when should the tax be applied and how it should be paid.
In accordance with the issues highlighted by the conference and specifics of dynamically developing blockchain sphere, our conversation couldn’t have ended without at least a couple predictions about future.
DU: The nature of the state’s relations with its citizens will dramatically change over the next 30 years. The blockchain technologies will be at the forefront of these changes. It is an evolutionary process.
The wind rose. I could see it even from the 58th floor. Must be the wind of change.