08:58 GMT30 November 2020
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    Iranian MP chairing the Commission for Economic Affairs Mohammad-Reza Pourebrahimi has suggested that Iran and Russia could use cryptocurrency to overcome sanctions and use it as a replacement for the SWIFT inter-bank payment system to execute international bank transfers. Sputnik discussed the issue with Georgy Ermakov, head of R&D Crypterium.

    Sputnik: A recent article spoke for the potential for Iran and Russia to use cryptocurrency to counter sanctions. What do you make of that news?

    Georgy Ermakov: That's pretty strange to me, but I still think that it is promising.

    Sputnik: Do you think it's possible? Why do you think it's strange? I'm wondering about the current cryptocurrency ecosystem; how can it be used to avoid or to counter sanctions, what are your thoughts on the possibilities that exist today?

    Georgy Ermakov: I think the main important thing for every currency, it doesn't matter whether it's a cryptocurrency or just any third currency, it's acceptance.

    If lots of people are ready to accept it, it will be useful. For example, I think you can practically anywhere in the world pay with dollars, but as for cryptocurrency, it is not the case right now. As for sanctions, I think if governments can fully implement it in the daily life of their citizens that could be possible, but as for now it's just another way of exchange, it's not like real currency.

    Sputnik: One of the thing that is often threatened as a sanction is cutting countries off from the SWIFT system, and it's very interesting to note, according to Toshi Times, Jose Dakak, the principal shareholder of the Argentinian bank Banco Masventas,  said that his bank is going to be dropping out of the global financial network, SWIFT, and they're going to use Bitcoin blockchain network to settle international payments. What are your thoughts on the SWIFT system?

    To be honest, it's quite outdated in many ways, it's not a perfect system by far, but still it is used by almost everybody and it can take up to five days to make transaction sometimes, not to mention that the SWIFT system has relatively high fees; what do you think of the possibilities of replacing the SWIFT system with a cryptocurrency-based alternative?

    Georgy Ermakov: Actually the SWIFT system it is pretty old already, but it is still very useful. I think practically every bank in every country uses the system and implements it in their services. Banks are pretty conservative organizations, it is very difficult for them to move to a new system, for example, even in Russia we have implemented our own processing systems around eight years ago, and if they really want to move to cryptocurrency there are also some problems in settlements in cryptocurrency.

    Yes, they're definitely faster than 3 or 5 days, but they're not immediate. I think it can be a problem for banks, as for now lots of banks have got direct information exchange and as for cryptocurrency there cannot be this direct, 100% exchange of information about payments and something else; so SWIFT is very good to transfer money, yes, it is not immediate, but lots of banks can just let you see this money even before it comes to your bank.

    Sputnik: When do you see cryptocurrency starting to challenge the SWIFT system? There's a cryptocurrency which is not a fully decentralized cryptocurrency, it's Ripple; and Ripple's concept is to sort of replace or be very similar to the SWIFT system, allowing banks to transfer Ripple and it's made for bank transfers, that's what the goal of Ripple is.

    What are your thoughts on the potential for Ripple? How far away are we from this, or is it going to be the international institutions fighting to the last to keep their SWIFT system intact?

    Georgy Ermakov: I still think that Ripple is at the early stage of its development because I don't know any bank which implements Ripple in their systems; they try to implement it, but it's still at the early stages of development. But yes, there are huge opportunities in this sphere.

    If Ripple, or other cryptocurrenceis, can be implemented in the whole banking processing system, I think they will just rule the sphere, because if you have a good think about cryptocurrencies, the volume of capitalization of currencies is limited, or it is controlled by a known scenario, for example, there's one limited amount of cryptocurrency issued, tokens issued or it could be mined with some costs, for example for electricity.

    In this case it would be really great for different countries to work with each other, because they know what to expect in one-two years’ time, because this is a standard mathematical model, not some unknown behavior of some dictators or something like that. In this case cryptocurrency has got really big opportunities, even in the nearest time.

    The views expressed in this article are solely those of Georgy Ermakov and do not necessarily reflect the official position of Sputnik.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.


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    ripple, financial risks, cryptocurrency, prospects, system, SWIFT, banking, Georgy Ermakov, Russia
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