Blockchain Truce? Putin's Internet Adviser Calls for US-Russia Cooperation

An adviser to Russian President Vladimir Putin has a strong message for state governments: stop competing for blockchain dominance.

As China, Russia, the U.S. and other countries around the globe seek to distinguish themselves in the way they regulate their approach to blockchain and cryptocurrencies, Herman Klimenko said that global superpowers should unite to create a coalition centered on blockchain technology.

Instead of competing at the highest level, Klimenko argues that state leaders should use their authority to work together to create the optimal playing field on which global coders and companies can compete.

Speaking with CoinDesk through a translator, the man who was appointed adviser to the Russian President in late 2015 further explained his position:

"We would like to advise to launch a common platform for your country, for our country, and we can invite other countries to join us, to have one platform for us to exchange the opinions of our authorities and governments."

As template for how such state-supported blockchain coalition members might be organized Klimenko pointed to the recently created Russian Association of Blockchain and Cryptocurrency (RACIB).

Klimenko helped found RACIB as part of his role as chairman of the board for Russia's Institute for Internet Development and, under the leadership of media entrepreneur Arseniy Sheltsin, the blockchain association is now divided into four areas of focus.

These include cryptocurrencies, ICOs, blockchain as a platform and "international calculation" – a focus area that hones in on how the technology might impact global relations. Here, participants have the opportunity to take part in public-private partnerships to build pilots around a number of potential use cases in both the government and corporate sectors.

While each of the four areas has a manager who oversees project coordination, Klimenko said the positions are more of a formality. Instead, he argues the 1,100 members who are currently registered don't "need physical management in the traditional sense."

"In this association, most of what we need from our members is their skills in different directions," said Klimenko. "We don’t have any membership fees, we don't need them, we don't need much in terms of traditional management."

Consortia wars

If the structure of RACIB sounds familiar, that's because in one way, there's nothing really all that new about it. But that doesn't mean the application of the structure at the state government-level might not result in tangible differences.

While it was individuals who largely helped the first blockchain – bitcoin – reach its current level of adoption, other applications of blockchain have largely depended on consortia of companies organizing around a wide-range of industries. From financial services firms to insurance companies to IT consultancies, it seems most industries have come together to launch blockchain consortia projects in pursuit of increasing efficiency.

But what distinguishes Klimenko's call for multilateral government collaboration on blockchain is the scale of the work, and what such a scale might eventually mean.

The distributed nature of blockchain means it relies largely on the network effects created by having as many people as possible participating – the more people or groups that use a blockchain, the more inefficiencies can be removed from a system and the more robust that system is.

Klimenko positioned the creation of an intergovernmental blockchain group as the removal of the final silo that could be inhibiting the potential benefits of blockchain.

"The competition is not between governments, but between programmers," he said.

As an example of how such inefficiences might be removed by government cooperation, he pointed to the nascent blockchain field of "telemedecine" or as Klimenko prefers to call it, "digital medicine."

While local reports about the association have largely focused on how it might use the initial coin offering (ICO) funding model as a way to fund internet-enabled medical services, Kilmenko said the research is actually much broader. By standardizing the way government regulators track pharmaceuticals he said new efficiencies could be revealed.

"If we take the medical data and scan the image from different parts of the world, from Russia, or USA, or China, or a different country, the data is actually the same, it is universal," he said.

China concerns

But it may already be too late for Klimenko's vision of cooperative efforts among governments.

In the past month alone, Russia's central bank has indicated it could take a more restrictive stance on cryptocurrency, the U.S. Securities and Exchange Commission (SEC) has released a report stating ICO tokens may be securities and China has taken the particularly drastic step of stating that ICO tokens are illegal and forcing the closure of bitcoin exchanges.

But as opposed to an outright ban – or other solutions that create silos instead of dismantle them – Kilmenko remains committed to a more nuanced, technology-driven approach.

"It's very clear the risk of cryptocurrencies and ICOs. And it's also clear there are methods existing to reduce those risks," he said. Klimenko is joined in this vision for a more unified global approach by RACIB director, Sheltsin, who is also the CEO of Russian news site, The Runet.

In conversation with CoinDesk, Sheltsin said part of RACIB's "main goal" is to help organize "concerted activity related to distribution of blockchain technology in [the] Russian Federation and beyond its borders."

He concluded:

"We think the governments cooperation on blockchain will help us to share the best practices in regulation and to deal with common problems."

Image via Michael del Castillo for CoinDesk