Russia and the Bitcoin solution

Tremplin.io interviewed Anti Danilevski. He is CEO of Kickex, an exchange platform operating in Russia. We talked about Western sanctions against Russia, BRICS and what the future holds for bitcoin.

Is Bitcoin popular in Russia?

The Bitcoin industry is significant in Russia. The country ranks second globally in terms of electricity consumption dedicated to this activity. Major government entities have partnered with some bitcoin mining companies (I'm not saying which ones out of discretion) to mine on their own. As a result, the industry is substantial and expected to grow further by 2025.

Is it fair to say that around 12% of hashrate comes from Russia?

No, Russia's real hashrate is 17%. But remember that a large number of Russian miners have companies in the UAE or Hong Kong, and they rent hash power from their own companies in Russia. So the real hashrate (in my opinion) is around 23-25%. This figure will increase further now that the government has legalized the industry. I expect many Chinese miners to settle in Russia soon.

What about mainstream adoption of bitcoin?

I'm not sure how many Russians own BTC. Nobody really knows. I think there are around 4-4.5 million holders, compared to a total population of 150 million Russians. As for paying with bitcoins, this is almost not the case due to its volatility.

The West has disconnected Russia from the Swift network. Has this sparked a renewed interest in Bitcoin?

In Russia, while there is significant adoption of cryptocurrencies in general, the number of people holding Bitcoin specifically is harder to pin down precisely. The widespread use of cryptos in Russia is largely driven by the need to transfer money abroad due to sanctions and the challenges posed by international financial restrictions. Many Russians, especially IT specialists and their families living abroad in countries like Thailand or Bali have turned to cryptocurrencies to send and receive money.

This necessity has led to an unprecedented level of crypto adoption in Russia. Millions of people have become familiar with various cryptocurrencies. However, not all of these users are focused solely on Bitcoin. Many use a variety of cryptocurrencies for their transactions, of course preferring stablecoins to BTC.

Sanctions have had an incredibly positive impact on Russia. It's not just about crypto. Everything is affected: software, hardware, factories being restored, and more. Starting in the 1980s, the Russian government under Gorbachev and Yeltsin decided to rely heavily on imports, which led to the destruction of almost all domestic industries. Russia has become dependent on imports, relying on other countries for almost everything.

The sanctions opened our eyes and, in just 2-3 years, we were able to stop an incredible amount of imports by producing at home. Growth in cryptocurrency adoption and friendlier legislation are just one aspect of the effort to increase our economic resilience.

Sanctions have also strengthened ties within BRICS. Russia took over the group's presidency this year. What should we expect from the Kazan meeting in October regarding the international monetary system?

BRICS are working on their own payment system. They have the idea of ​​creating a replacement for the SWIFT network. They could also announce a new common BRICS currency (the working name is GDR). But there is already an alternative to SWIFT in Russia. However, international banks do not adopt it for fear of American reprisals, that is to say a closure of their vostro accounts in USD.

So I don't expect anything really new. Everything is already known and building this parallel financial system will take years.

Do you think bitcoin is taken seriously among BRICS?

Not by central banks. Not because it's “bad”, but rather because of its volatility. It is impossible to transact in BTC for “serious” companies.

Why couldn't private banks use bitcoin as an international payment system?

Because their contracts are in dollars, rubles or yuan. Imagine you bought 10 BTC for $600,000 to complete a trade, and an hour later those BTC are only worth $500,000. So you have to buy $100,000 more. These risks are unacceptable for large companies.

Will bitcoin volatility ever be acceptable? The Bank of Russia recently launched an experimental payments platform using cryptocurrencies to circumvent sanctions. Which cryptocurrencies will be used?

I don't think it will ever become acceptable, bitcoin will always remain volatile. For payments, only stablecoins would work.

There is a chance that lightning BTC could be used, if the fiat – BTC – fiat conversations were really fast and with a fixed and predefined exchange rate.

Is the Lightning Network something the Russian central bank is testing to oil imports and exports?

No, they don't know what the Lightning Network is, that's for sure. For them there is no difference, BTC is BTC.

Russia recently resumed its gold purchases. Is a gold-backed stablecoin the most popular option being considered to compete with the dollar?

Stablecoin in Russia is discussed in theory. In practice, there is no law on stablecoins yet. I attended a conference yesterday, we were talking with one of the finance ministers of Russia about this. A law is in the making. But when and if it will see the light of day, no one knows yet.

I said it was inevitable: Tether will continue to freeze the wallets of sanctioned companies and BTC is too volatile. Russian international trading in US stablecoins is VERY risky. Russia needs its own stablecoin. The government agrees with my point of view.

I will visit our Central Bank this week or next week and we will talk about it again. Maybe I can get things done, we'll see.

You're sort of advocating for international transactions in bitcoin, via the Lightning Network, and settled immediately in Russian stablecoin to avoid the volatility problem, right?

In a way, yes.

Bitcoin is not only an uncensorable payment system, it is also a store of value. Donald Trump seems to want to back the American dollar with it. Should we expect Russia and China to eventually follow suit?

IMHO there is a 0% chance of this happening.

Why not since they are already buying gold and other precious metals to bolster their reserves?

They understand gold, but not cryptos, and they are very afraid of volatility. Moreover, as one of the Duma deputies said, “the internet is developed in the United States, so it is dangerous and we should not use currency controlled by the United States”. Need we say more…

Thank you for your time Mr. Danilevski. Finally, could you tell us what, in your opinion, could be the best scenario for bitcoin in the next 5 years?

It is very difficult to predict, but I believe it will grow significantly. The recent halving will soon start to be felt, and in 3.5 years we will have another halving. So, I expect BTC price to be around $200,000-250,000. I think BTC is the best long-term anti-inflation asset. It will be increasingly used as a means of storing value and kept secure. Everyone here is now wondering how to buy cryptocurrencies, those who never thought about it before. So we're just at the very beginning, and adoption hasn't started yet.