Ukraine is positioning itself as the Crypto Capital of the World
At a time when China and the United States are pushing anti-Crypto regulation, Ukraine is doing the opposite - opening its doors to the most innovative and important technology of the 21st Century.
In America, an infrastructure bill is being passed that also includes important changes to the way
Cryptocurrency is handled. Far from it being an informed and well-intentioned piece of Crypto legislation, the wording of the bill suggests an attempt to regulate the Cryptocurrency industry to death. It seeks to make every facilitator of Crypto transfers or transactions a ‘broker’, responsible for strict Know-Your-Customer (KYC) compliance as well as tax reporting. This might have been acceptable had the definition only extended to centralized Crypto exchanges and companies, but the decentralized nature of Crypto currencies means that the miners, validators or stakers that run the network also fall under this category, making them legally responsible for facilitating transactions to people they know nothing about and have no way of knowing. While this format of the bill is unlikely to become law, it shows either the complete misunderstanding of how Crypto works, or the intention to regulate Crypto to death and send all Crypto related business abroad – perhaps a bit of both.
It is a similar story in China, where the government has cracked down on miners, exchanges and overall use of Cryptocurrencies, partly perhaps in an attempt to monopolize China’s own centralized digital Yuan and leave no space for better decentralized alternatives. This has led to a mass exodus abroad from miners, developers and exchanges, something which will follow in the US as well should their anti-Crypto legislation pass. The government protection of banking monopolies is nevertheless a futile endeavor, the future not only of money, but of data protection, private ownership and other bureaucratic matters, will be based on decentralized
blockchain technology. With that in mind, the exodus of business and talent in the Crypto industry from two economic superpowers only means this presents a huge opportunity for a country that is not shortsighted or shackled by banking lobbies, and instead is prepared to take risks in order to secure its place as an industry leader in the future.
No other country in the past few years has made such progress in terms of positive Crypto adoption than
Ukraine. Much has been said about the movement in South America in countries such as El Salvador and Paraguay where Bitcoin is being made legal tender, but while the economic reasoning is sound, the plan lacks depth and does not adequately address how Crypto can be used to benefit the lives of its generally not so tech savvy population. Much of the rhetoric in South America is mostly politically driven as a form of opposition to the U.S Dollar and its influence in the region.
In Ukraine we have something completely different; there is a well structured plan, one driven by its own ministry, the Ministry of Digital Transformation, a rare example of how extending government branches can be a good thing. The plan here is not merely to officially allow payments with Cryptocurrencies, although that is something that is being worked on, but also to start education programs for blockchain and virtual assets as early as school-grade children, all the way to University level courses on decentralized
finance, as well education on the subject for politicians. This alone if implemented will already put Ukraine as the first country to have government backed education on blockchain and decentralized finance.
Education is the backbone needed for any new technology to be able to thrive and benefit society, just like it was with computers and the internet. Blockchain may yet prove to be as big if not bigger than that, apart from revolutionizing finance, it will change the way the entire bureaucratic system works. In Ukraine this has already begun with the Diya application that can store the user’s identity documents and offer services such as driver license renewals and address registration, all with the goal of making bureaucracy digital and paperless.
By having a populace educated in Crypto technology, applications like Diya can become a complete form of a digital identity when combined with blockchain. When something is just digital, while it is convenient and paperless, it can still be copied, hacked, or manipulated. With blockchain or distributed ledger technology, the owner has a Cryptographic key, which just like a physical key locks (encrypts) digital data so that only someone with the right key can unlock (decrypt) it, making it incredibly secure, uncopiable and verifiable. This enables the digital identity to be as unique as its corresponding physical identity, meaning it is as hard to forge or copy the digital identity as it is to clone the physical identity. The digital identity can use his/her unique Cryptographic key as a signature, just the same as a physical signature is used as a unique form of verifying an identity - this will mean the ability of secure digital voting, less reliance on third parties such as notaries, and verifiable proof of ownership. Recently there have been scandals over alleged voter irregularities in the U.S, and more and more people are distrustful of the democratic process when it is run by voting machines with simple software that can easily be manipulated and are not verifiable. In countries still with rudimentary paper-based record keeping such as Russia, ownership raids through forged notary stamped documents is still a very common way of stealing land, real estate or businesses. With a digital identity where all documents are kept encrypted and are impossible to alter, forger or copy, this makes voting and private ownership verifiable, trustworthy and fraud impossible.
This is the future we are heading in, and while America and China continue to kick out Crypto innovation, and other ex-soviet countries such as Russia continue in the old ways of tedious and insecure bureaucratic bookkeeping, Ukraine can capitalize on the moment and lead the way toward a secure and trustworthy age of digital ownership and decentralized finance.
Author Bogdan Marinov Blockchain & cryptocurrency expert