1. Discussions
  2. A round-table discussion is being held in the Institute of Economics and Mathematics of the Russian Academy of Sciences. Its prim and proper scientist community is thoroughly discussing a recent innovation - blockchain.

    One of the invited members is a young man suggesting all new fields of application of blockchain based on one’s unability to fake any information in it. The range of fields is truly wide - from notarization services to state administration.

    The director of the Institute, an academic, asks a clarifying question: “So, all the tasks you’ve described may be accomplished with just one blockchain?”. The young man nods confidently: “Certainly!”. The academic answers: “Please let me question it. For example, in economics, there is no universal mathematical model suitable for all the tasks arising in it. I think there is also no certain blockchain which would be applicable in all the ways you have outlined. I suppose a different modification of blockchain will be required for each task.”

    Of course, the academic was absolutely right. The blockchain technology may be the basis of development of many different and great blockchains, and each of those may be tailored to a range of relatively special tasks.

    Singapore. We meet with an innovator using the blockchain technology for applicable tasks. He asks us: “What kind of blockchain do you use?”. We say it’s Bitcoin’s. And he loses interest. We ask if it’s connected to transactions in Bitcoin which are 5-7 per second and last from 10 to 30 minutes or even longer. He confirms it and nods.

    We say we’ve modernized the blockchain of Bitcoin and made everything work in the physical online at the speed of hundreds of transactions per second. Then an avid interest in our system grows and a 2-hour discussion follows. In the end, a firm handshake and plans of future collaboration.

  3. Choice
  4. The theme of blockchain is very often discussed overly emotionally. In fact, it is simply a distributed database, and many such exist today. Its main difference from the rest is: the problem of data synchronization (when transactions coming into the blockchain may be directed to all the system’s nodes at once) is effectively solved. Certainly, this was done partly by restricting the database’s functionality to one particular case - storing the information about who owns assets and the amount of such assets owned.

    But there are more technical advantages. In blockchain, its integrity is checked by special organization of the chain of blocks where transactions are stored. With this way of storing information, it is quite easy to detect if someone is trying to change the data. This is why it’s said that blockchain is an integral and unchangeable data registry.

    Blockchain uses cryptography - private and public keys. Because of this, it automatically becomes a verification center - any data stored and signed in it are easy to check without key exchange.

    In our opinion, the blockchain of Bitcoin is the most suitable for real applications in the field of payment services. It has been working in the market for over 8 years, has survived many troubles, but the team of supporting developers has overcome them all and now it is quite well-tested. Most importantly, this blockchain was tailored to payments exactly. As to the slow operation, the reason for it was certain settings of Bitcoin itself and not any flaws characteristic of the blockchain.

    We have managed to make the operation of the blockchain hundreds of times faster. And we believe it’s not yet the limit. Although setting it for better performance takes a lot of effort, it brings new ways of application of the system and growth of its clientele. 

  5. Privacy
  6. In the end of 2013 - beginning of 2014, we started researching the ability of creation of financial services on the basis of the blockchain technology. At that moment, blockchains were only public, i.e. the data stored in them were available to everyone who downloaded a special program from the website.

    In case of a public blockchain, if the data are available to everyone, anyone may check them at any moment and make sure they’re not faked. This was particularly important in the end of 2008 - the beginning of 2009, when the world’s financial system suffered a crisis and the trust in it was lost.

    However, having working in the banking field, we believed the matter of bank secrets was crucially important. There’s no way to explain to a usual client why their transaction data and the information about the remainders on their accounts are available openly. It doesn’t matter that the data are formally anonymous, most of clients would not appreciate such openness. They say money loves silence.

    We solved the problem of trust the same way as banks did. We built our own business under control of all the regulatory and the supervisory authorities. Plus, we chose Singapore, the most strict jurisdiction.

    One more blockchain’s advantage is the speed of transaction processing. Exactly in case of a private blockchain, it is possible to improve the system’s performance.

    Later, we learned that bank consortia also followed the rule, focusing on private blockchains and not public ones.

  7. Architecture
  8. Blockchain in a payment system is an equivalent of a bookkeeping record in an automated banking system. That is, it is software hidden from people’s eyes deep in the heart of a bank. Besides, blockchain is complex enough, and not every computer geek may understand its operation, not to mention a random user.

    Blockchain is a powerful instrument for transaction processing, but it must be “wrapped” by service programs, for example, a simple API (Application Programming Interface). As to the system’s end users, they get greatly designed and convenient applications using that API.

    As a result, we built a system distributed to several data centers, and its transaction core is securely hidden and protected. Technically, it ensures stable operation of the settlement system and protection from any external influence.

    The next level we had to set was the one of an external API. Blockchain itself works with very primitive things - cryptographic keys, addresses, transaction gateways, signatures, etc. Programmers call those low-level objects, and working with them is quite difficult. The task of the API is to make every integration interact with more usual “real” things: clients, accounts, payment orders. We implemented these ideas in the system with help of our long-term experience in banking, and built the system as a prototype of some settlement “bank” for carrying out payments and converting currencies.

    Later, we stepped up to another level - services for end users: web and mobile applications, a Telegram bot, USSD services. It is important that all of the applications were created with use of our API.

    The idea of an open API for third parties has been successfully implemented. They can create own applications on the basis of Copernicus Gold, and earn this way. The theme of an open API is now very popular. For example, the European regulatory authority has published special guidelines about it.

    In the world of today, we can observe unprecedented growth in the field of Bank-as-a-Service. We have first introduced this concept back in 2011, in one of our banking projects. Now, having enough experience in the field of such technologies, we have managed to implement this idea in Copernicus Gold project, at even a higher level.

  9. Pursuing perfection
  10. We have created several high-tech banking products or our long-term career, as well as a scoring system for assessment of borrowers’ reliability, allowing to reach the rate of less than 1% of late credit payments in the Russian market where working is not that easy.

    This is why we approached the implementation of this project holistically. We were conducting external testing for over a year. About 250 people participated, and we accepted over a thousand offers of improvement of the system.

    In our professional activities, we are guided by the following principle: “You can never make a first impression twice”. This is why we have launched not a startup made by one click but a powerful system with extended functionality, which is technically complete thanks to the thorough long-term testing.

Vladimir Frolov, Chief Academic Advisor of the project 

Alexey Romanchuk, CTO of the project