Vyacheslav Kunev: Regulators will not allow the cryptocurrency capitalisation to exceed $ 1 trillion
How is the blockchain industry developing in Moldova and why are regulators disapprove corporate private money? These and other questions were discussed in an exclusive interview for LetKnow.News with Vyacheslav Kunev, the President of the Blockchain Association of Moldova and member of the Economic Council under the President.
- You are the head of the Moldova blockchain association. What does this organisation do and what are its functions?
- The organisation’s task is to unite everyone who is interested in the development of blockchain technology in Moldova. Unfortunately, there are not very many such people, but the company nevertheless united a certain amount of interested parties with the goal of regular communication and putting forward common initiatives.
- How has the attitude of the Moldovan authorities and residents of the country towards cryptocurrencies changed in recent years?
- When the association arose, there were a lot of questions and requests about what cryptocurrencies and ICOwere, how to join, how to make money etc. A lot of activity was connected with the explanation of all those aspects. Around the same time, various frauds around blockchain projects started to emerge and the association was invited as an expert to explain their differences from scam products. As a result, a year ago, everyone who was interested already understood what Bitcoin is and how it works.
Also, those who were interested - did invest, but I can’t say that it was some kind of super-mass phenomenon. In this regard, our country is less advancedthan
Ukraine or Russia in the number of transactions with cryptocurrencies. There was an attempt to create an internal cryptocurrency exchange. But after its creation, it was all over. I know that several companies were considering options for attracting investments through cryptocurrencies, but this did not go beyond intentions.
How popular are cryptocurrencies and blockchain technology in the country?
- In general, speculative interest in cryptocurrencies has already passed away. It remained only with those who learned how to make money with it. Also, for some people it is an effective means of payment, which for a number of operations is very logical and justified. However, it is difficult to say it’s playingany significant role.
As for blockchain technologies, the situation here is as follows: the state is not interested in blockchain. There were attempts to propose several projects to the authorities, but the state did not see anything interesting for itself. At the same time, this industry is not regulated in any way and there are no legislative restrictions or anything like that.
All in all, two really working blockchain projects have been implemented in the country. The first one is the Fleet management system, a United Nations startup to manage the fleet of the UN office in Moldova. This project was developed by Deeplace, it works successfully and now the product is scaled to other countries.
The second project is called Gustos.Life. It involves the use of blockchain technology for wine tastings and to track the history of individual wine bottles. This software really works; five or six international competitions have been held on it. Here, the blockchain solves the problem of transparency of competitions, since on all types of tastings there is a suspicion that the organisers are carrying out some manipulations with the final assessments. We made a system in which a video presentation of the tasting procedure is simultaneously carried out and voting records on the blockchain are displayed on Explorer. In other words, we can prove that after the taster has given his assessment, it is impossible to change it and, accordingly, all the final assessments of the tasters are honest. In my opinion, this is a rather interesting application of the blockchain. While the system is used in Moldova, Georgia and Ukraine, but they plan to expand the project to all wine countries.
The second part of this application is tokenising each bottle of Fine wine and Collection wine categories. Two tasks are solved here - tracking the history of the movement of the bottle and its transformation into an asset. Since if the wine moved across the ocean and the temperature regime was violated, it is likely that it has already been spoiled. And if you know that the bottle was in the right place and did not leave the wine cellars, even though they bought and sold wine several times, it is transported to you only once as the final beneficiary. In essence, that’s a
token that can be bought and sold, and it is a cryptocurrency secured by a tangible asset. Therefore, despite the fact that Moldova is not very noticeable in the global cryptographic world, but on the other hand, it launched two quite interesting projects.
I think that many projects could be done at the state level, as we have a fairly developed IT infrastructure. Also, we had parliamentary elections in February, and I was the first candidate to use blockchain technology to conduct private polls at my polling station.
- Do blockchain projects contribute to Moldova’s economic growth?
- At the moment it’s impossible to say that they actively contribute to the growth. Another thing is that there is a certain invisible phase, when a business looks closely, looks at projects that are already running, and studies. There is a preparation stage. But the problem is that there is some kind of romanticism, that if you add the word “blockchain”, then the project will immediately become in demand.
- How did blockchain and cryptocurrencies affect the payment market?
- Cryptocurrencies have occupied their niche. In certain situations, it’s really more convenient than standard payments. Although the unpredictability of commissions that need to be paid in certain periods, especially if it is an urgent payment, really needs to be addressed. National banks of all countries of the world will never allow the total capitalisation of cryptocurrencies to grow more than $ 1 trillion. As soon as they approach that figure, regulators will immediately begin to create problems.
As long as cryptocurrencies do not interfere with national banks, they will exist, but if their volume exceeds $ 1 trillion, then this should be headed by government agencies. At the same time, when duringsome discussions they say, theywould make bitcoin the reserve currency, supposedly this is the digital gold of the future, then you need to understand that 60-70% of all reserves are concentrated in less than 5% of bitcoin users. Therefore, reasonable countries cannot use a reserve currency with such a ratio of key persons who can do anything. Therefore, bitcoin in its current form can in no way be considered as a reserve currency. And with a sound mind and good memory, any regulator who can afford to issue money as much as he needs will not limit himself in doing just that.
- Why do regulators cautiously look at Libra?
- Because as soon as there is at least some chance that this story will grow more than $ 1 trillion, while not falling under the regulation of the largest players, it means that the project will be cut down in the bud. And they figured that it could be significantly more than one trillion. After all, Facebook, in fact, proposed a cross-border payment system that does not comply with any regulatory standards, but reports directly to Facebook, and then it can start lending. And all regulators will fight to the end, because that means that this market is floating away from them.
I have the feeling that Zuckerberg tested the reaction of those people who allow him to play those games. And it seems to me that he got a rather tough reaction. Either this whole story should be under the treasury of the United States, then they will say “it is possible”, but in no other way. Because that’s a supranational history and no regulator will allow it.
- It turns out that the regulator might lose control over cash flows if Libra starts its work?
- Yes, the regulator is a conductor of state interests. And the largest emission center in this case is the FRS. And at this point a story that casts doubt on its hegemony in this marketmay occur. It’s always has killed in the bud, and no one will ever allow it.
It must be understood that for a subject country this is a loss of sovereignty. Moreover, in fact, this is the creation of a parallel emission center. Imagine the situation, you are given a choice of several currencies for receiving a salary - the currency from Facebook, Microsoft, Moldovan leu and the hryvnia. Most likely, a person will choose a more stable currency, for example, from Microsoft. And as a result, states have a complete loss of national sovereignty, because in that case it will not be able to receive taxes and no one will use national money. No, no one will allow that happen.
- But representatives of the Austrian school of economics say that Libra is private and corporate money, which is a competitive product.
“Well, yes, and there must still be world peace.” You need to understand that there is cruel reality, and in this competitive world there are rules of the game. Corporations already have too much power. If conditionally Google decides to disconnect a country from its servers, then a massive economic crisis will immediately occur in it, since all mail, all information is tied to Google servers. And since no one has signed any agreements with states, there is always a possibility of such scenario. This is the dependence of states on technology companies.
And if corporations still get the right to issue money and manage cash flows, then government entities will simply disappear. No state in their right mind and in good memory will allow that. And it is possible to overcome this harsh reality only through civil society, through networked entities, but that would take at least 5-10 years. So, when network communities will be stronger than centralised states. Moreover, the goal of states and corporations are the same - it’s power and control. The state, however, acts on the basis of a social contract and the provision of certain social guarantees. Technology companies only hunt for money and talents. That scenario is somewhat worse.
- How do you see the money of the future?
- It will be definitely anon-cash one. First of all, cash is much more expensive to maintain than non-cash: printing, collecting, exchanging old for new is expensive. Secondly, cashless payments are an opportunity for total control and taxation, not income, but expenses, since all payments will be absolutely transparent. And in what form that non-cash transfer will already be - it does not matter.
Moreover, a person or his property, can be represented as an asset and get its value. For example, a person owns a car and an apartment. You can estimate how much 1 square meter of apartment costs and he will have the opportunity to sell or exchange it. I believe that assetstokenisation is the future.
The question is, what will we trade with: only the universal monetary equivalent, for example, money, or the totality of tokenised human assets?
- What are the challenges facing the blockchain industry in the world and in Moldova in particular?
- Moldova does not face any challenge, it simply follows the trends in the market. At the same time, one of the main challenges in the world is the very expediency of using blockchain. In my opinion, cryptocurrencies are a dying branch of the development of this industry. And for me, blockchain is asset tokenisation since the vast majority of global assets are not valued, even the US economy is valued at only 60%. And in countries like Moldova and Ukraine, this percentage is many times less. And thanks to that, each company can receive the real value of its assets, which at the same time can be freely exchanged. And this is a completely different level of liquidity. And the higher the liquidity level of assets, the greater their turnover and the higher the economy grows.
The second huge block is blockchain voting. It seems to me that the world should go in the direction of liquid democracy, when polls are made for any tasks, and the voice is transparently transmitted to the most competent person, and thus you delegate this or that decision to him. And without a blockchain, it is almost impossible to achieve.