The Russian political party Partiya Rostiya has launched the world’s first blockchain-based social project by issuing its cryptocurrency called Upcoin in collaboration with the blockchain startup Waves to promote blockchain technology awareness and to incentivize its party members to engage in more community-based activities.
Russia and the Blockchain
Initially, when bitcoin and the blockchain first made waves in Russia, the government's perception towards the digital currency and its underlying technology was not favorable to the point that bitcoin use was effectively banned in Russia. However, the consistent growth and stabilization of the value of bitcoin and the developments of real-world business applications for blockchain technology have swayed lawmakers’ opinions towards taking a more positive stance towards cryptocurrencies and their underlying technology in recent months.
As a result of increasing global interest and trust in digital currencies, on December 28, 2016, the Central Bank of Russia launched a FinTech association with the aim of studying blockchain technology and finding ways to implement it into Russia's financial market. The FinTech Association is composed of representatives from major financial institutions such as banks, payment processors, and the National System of Payment Cards. Payment processor, Qiwi’s, CEO Sergey Solonin was named the head of the association.
“The Association’s key objectives will include the development and introduction of new technological solutions to ensure the development of the Russian financial market. It will also promote digitalisation of the Russian economy,” said Bank of Russia’s Deputy Governor Olga Skorobogatova. She added that the association would investigate new digital identification and payment systems. These actions clearly signal the central bank's intention to boost blockchain adoption in the country's financial sector.
The Russian government has also been considering the use of the blockchain in other areas such as secure document storage and has conducted several tests in this area. The government has also partnered with startups to explore the potential in the circulation of blockchain assets.
The Waves Platform
Moscow-based blockchain startup Waves was founded in 2016 by Sasha Ivanov to create a platform for the issuance for customized digital tokens. The startup managed to raise 30,000 bitcoins during its ICO in June 2016, which at the time was valued at 16 million USD making it one of the most successful crowdsales in history.
Waves is a blockchain-powered digital token platform that focuses on the creation and usage of custom tokens. It also focuses on fiat currency money transfers and crowdfunding. Ivanov created the Waves with the aim to make blockchain technology accessible for average users who are accustomed to regular online banking platforms. Therefore, he modeled the software in such a way that it is easily installed and used, requiring no extra downloads such as connectivity to the blockchain.
Due to the massive success of Waves during its ICO stage, Ivanov has become a well-known contributor in the blockchain market globally and even more so in Russia, his home country. Because of his proven track record, Partiya Rostiya (the Party of Growth), one of Russia’s minority opposition parties sought his help to create the first social project based on the blockchain.
The leader of the Party of Growth, Boris Titov, has long been a supporter of blockchain technology and the blockchain based community platform is his brainchild. Titov, who is currently Russia's business ombudsman, where he investigates complaints and mediates just settlements, has had a long history of civil service. He also has a background in the private sector through his years in a petrochemical investment and trading group.
Since the Waves platform allows anyone to create their own blockchain tokens, which represent what the issuer wants, Titov saw it as an opportunity to create the community he had envisioned by leveraging the distributed ledger technology.
The Upcoin Social Project
As a result of the collaboration between Titovs’ Partiya Rostiya and Waves, the cryptocurrency Upcoin was created. Upcoin is considered to be the world's first social project based on the blockchain.
Using the Waves platform, ten million digital Upcoins were created. These coins are readily available for people who sign up on the projects portal Ludirosta. Once a user signs up, he or she receives an e-wallet which is used to store the tokens they receive. Tokens are distributed electronically for taking part in community activities such as participating in party meetings. The tokens received can then be used to acquire access to discounts at partnering social services such as education programs or other classes offered at local community centers.
Ivanov, speaking on the advantages of the Upcoin token stated: “Unlike usual loyalty program development and implementation, the implementation of a blockchain token costs very little – it’s several times cheaper. Furthermore, such technology provides benefits such as the full transparency of the system, low friction e-cash payments and a permanent, unalterable record of transactions.”
Though the Upcoin is groundbreaking as it paves the way for blockchain applications in social projects, the token will not be just used as a parallel to money or a holder of value, but the political party also aims to use blockchain technology to develop a secure online voting system for its party. That means that party decisions can be reached quickly, securely, and transparently due to the blockchain’s immutable and easily auditable nature.
Commenting on Upcoin as the world's first blockchain-based initiative that rewards people for participation in social activities, Ivanov said: “For those who have been working in this space for years, aiming to increase blockchain adoption, it’s a vindication of our efforts ... It’s also great to see Waves, the ‘blockchain for the people’ platform we designed for mass adoption, being used for exactly the purpose it was created for.”
It remains to be seen how the Upcoin project will perform and whether Rostiya party members will embrace the new digital currency but the project will surely help to boost blockchain and cryptocurrency awareness in a country that is yet to open up its arms to embrace these innovative new technologies.