Ten features of the new blockchain technology developed at St Petersburg University − the Russian analogue of the SWIFT system

Today, the experts in high-tech industry particularly focus on import substitution and therefore come up with their own developments. Developing alternative technological solutions is a challenge for Russia in 2022. Despite all the difficulties, it is set to develop both specialists and the whole industry. Some have an aim to adapt a new development to modern conditions, while others are more interested in developing not just an analogue, but a product to ensure faster and more efficient performance. In April, the Distributed Ledger Technologies Centre at St Petersburg University began to develop a decentralised international system of interbank financial messages using blockchain technologies that is the analogue of the SWIFT system. As early as July, the Centre began testing the new decentralised system.

What makes the DCMS (DeCentral Message System) different is that each of its participants stores transaction information and owns the system as a whole on the equal basis with other participants − whether it be a bank from Russia or a bank abroad.

This approach completely eliminates the possibility of illegal disconnection, because there is no single owner who can restrict access to others. Distributed ledger technologies guarantee the safety of all transactions and the openness of the information system. Each participant receives a full-fledged financial instrument that they can use for their own purposes without fear that the solution may be taken away by someone or you may be disconnected from the system. Each bank that uses the system has the right not to accept payments, if, for example, this violates its legislation or corporate rules.

Despite the absence of a single owner, the use of the DCMS does not infringe on the rights of the regulators of the participating countries. Quite on the contrary, it increases confidence in the system as a whole and eliminates the risk of involuntary disconnection from the system. The system must be used in accordance with the requirements of national legislation.

To ensure that the DeCentral Message System operates successfully, not all countries need to be connected to it.

When using the system, you can build many autonomous small networks. In future, they can be automatically combined. For example, two or more banks in one African country may start using the DCMS to exchange financial messages with each other. Then, two or more banks in one Asian country can also start using the system. Once one of these African banks exchanges messages with an Asian bank, both networks will merge and everyone will be able to exchange financial messages with each other. Over time, the number of such autonomous networks will increase, and the networks will become larger. Each participating country will have an open, independent solution to ensure all technical and financial processes.

Today, participants are surely concerned about privacy. They want to decide who will have access to information about their transactions. The DCMS project has been developed in the way to enable international transactions. In particular, the DCMS system is moving taking into account cross-border transactions and can incorporate the features of encryption algorithms allowed in different countries. The system allows to provide local access to information, i.e. only between the participants of the transaction and their regulator. For other participants, the ongoing operations are intended to be kept hidden.

The decentralised nature of the system also enables companies to exchange financial messages using third parties if direct interaction is not possible. The risk of receiving information about such messages by someone else is excluded. Only two participants can be known to the intermediary, i.e. the bank that sends the message, and the final address. The data about the sender will be hidden. Information on each intermediate operation is stored by both parties, i.e. the sender and the final recipient, and it can be confirmed. This is ensured by verifying the electronic signature with a public key.

Another advantage is that the countries, using the DCMS, can pursue a more independent financial policy and ensure the privacy of transmitted messages. The companies, using the system, do not pay a commission to the owner. In other words, all costs are only about acquiring relatively small server capacities.

Additionally, they can independently set a commission for transactions and earn money on it. For example, if one bank wants to transfer financial messages to another, yet not directly and by another bank, then the latter can take a commission.

Commercial organisations (not banks) can use the DCMS to exchange financial messages within the organisation for free and only make the final payment through the bank. Thus, this is set to reduce their costs. They can also use the message formats of the used systems and build new international services based on the autonomous system, including using smart contract mechanisms.

All these are no longer a matter of the future. Now, we have the DeCentral Message System developed by the Distributed Ledger Technologies Centre. Any company from anywhere across the globe can test the system. With each company, the developer signs a confidentiality agreement; provides the necessary documentation; and provides advice and technical support for integration with the existing information systems in the company. After testing, the DCMS is expected to expand in the open-source format, i.e. free of charge. Users will pay only for additional services, for example, the development of special integration mechanisms that are not provided by default.

In Russia, there is the Russian financial messaging system, i.e. the SPFS of the Central Bank of Russia. Many foreign banks work with the system. The number of Russian banks exceeds the number of the Russian banks participating in the SWIFT system before the forced shutdown. The system developed by St Petersburg University can open up new opportunities for financial interbank messaging both for any legal entities that can exchange messages directly and for those companies that, for some reason, cannot use other solutions.