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In Ukraine, at the first reading, the bill “On virtual assets” was supported. This could be the first step towards the legalization of cryptocurrencies in the country. The National Bank has already announced that they are preparing to launch electronic hryvnia and are considering options on how to introduce new currencies.
Read about what the innovation will lead to and how it will be possible to pay with electronic currency in the OBOZREVATEL material.
Like Bitcoin, but Ukrainian
The principle of digital currencies is quite unusual compared to traditional ones. These coins are of two types: backed by real money (stablecoins) and without such backing (cryptocurrencies)… The cryptocurrency (the most famous is bitcoin) works in a decentralized way. Its price is formed on the basis of the cost of the resource spent to extract (extract) said currency. And anyone can do it. Now there are more than 5000 cryptocurrencies.
Stablecoins are coins issued by private companies or organizations in well-defined amounts. These currencies are tied to 1: 1 fiat money. For example, if a company issues stablecoins pegged at $ 3 billion, then it should have real $ 3 billion in its account.
Stablecoins also includes digital currencies of central banks of different countries (CBDC), such will be the electronic hryvnia. It is also backed by paper money (1: 1 with regular hryvnia) and is fully controlled by the regulator. As planned, the e-hryvnia should be published in the same way as one on plain paper. Those. NBU cannot create infinite amount of it, otherwise it will lead to inflation, as if the National Bank turned on the machine and printed hundreds of billions of hryvnias. In fact, the e-hryvnia has all the properties of a paper one, but it cannot be touched.
Benefits of the e-hryvnia
All cryptocurrencies, including the e-hryvnia, work on the basis of blockchain technology. Blockchain is a data record like a chain of “blocks”. Most of the time, the copies of the strings are stored on multiple computers. Therefore, the system is difficult to modify and is considered very reliable.
One of the key tasks of digital currency is to simplify payments. When you make a transfer from one account to another, then in the usual hryvnia, which is in the bank account, the transfer will take between 15 minutes and an hour. And through blockchain, the operation is done almost instantly.
The global payment system works in a complex and expensive way. It includes many foreign correspondent banks that allow transactions to be carried out anywhere in the world. But even if you have just put money in your bank on your card, the price of the service will already include the cost of the work of the ATM that will carry out the operation, or of the collector who takes the money from the terminal through which you make the payment. And the blockchain system itself performs the functions of a kind of “virtual bank”. It is pre-programmed for certain operations that are carried out without redundant infrastructure and without the participation of third parties.
“Since you don’t need all these systems, the e-hryvnia transfer is cheaper,” says Ruslan Kolodyazhnyy STO (Technical Director – Ed.) Of British financial technology company Wirex. – Transferring 1 million UAH on the e-hryvnia platform will cost 1000 times cheaper than transferring from one bank to another. If banks charge 0.5% for their services, then one million is a significant amount. And in e-hryvnia, there will be a penny. “
The collapse of the banking system
Although the system itself is quite well protected against hacker attacks, there is still a security problem in it. In particular, Electronic wallets that store digital currency are anonymous. They are not linked to personal data: the name, surname of the owner, but they only have a number. Therefore, there is a risk that terrorist organizations may be financed or laundered through such systems. But Ruslan Kolodyazhny will be assured that there is opposition to this.
“Ukraine really already has problems with financial monitoring. Our legislation significantly restricts any work in this direction. But in Europe and the rest of the world, many systems have been created that work on the blockchain and monitor transactions in cryptocurrencies and currencies. The failure of our financial monitoring is connected only with a lack of understanding of regulatory principles: how it works. But this problem has a solution. Monitoring systems and procedures have been developed a long time ago. We just need to implement them, “says Kolodyazhny. .
For many Ukrainians, digital currency is associated with the money that is in our bank accounts and with which we can pay other than cash. But there is a significant difference between money on a bank card and digital currency. The former exist in the banking system, where all operations have already incorporated the bank’s risks, and the latter are outside the banking system, the human factor is excluded from all operations and they occur independently. Therefore, the spread of digital currencies poses a great risk to the existence of the banking system itself. With the introduction of e-hryvnia, more and more people will come to the conclusion that the classical banking system is not so convenient, and the money for its maintenance is spent irrationally… People can start investing more in the same e-hryvnia, money will flow to the National Bank, and other banks will have liquidity problems. Systems like Visa and MasterCard can simply become unnecessary.
“If e-hryvnia were issued, people would try to keep money not in an ordinary bank, which might ‘explode’, but in it,” says Sergey Vasilchuk, co-founder of Attic Lab, which developed e-hryvnia. “The banks fear this. , for them it is a risk. They understand that people do not trust them and are willing to store money digitally. But this is not a problem of assets, but of the banks themselves. We cannot support them artificially. This is reminiscent of the Soviet Union, where restrictions were placed on “Manually” managing the economy. I think everyone remembers how this system ended. “
But it is also possible to avoid the collapse of the banking system after the introduction of e-hryvnia. For starters, the NBU can limit the amount of money that can be stored in the e-wallet, as well as the annual amount for which transactions can be made.
When will the e-hryvnia go into circulation?
In 2018, e-hryvnia was tested for the first time. 5,443 UAH were put into circulation in electronic form. The e-hryvnia operations were carried out by working groups of the NBU, voluntary companies and the World Bank. But it did not go beyond the test. The project has already survived three NBU bosses, but none of them gave it a full-blown move. Sergey Vasilchuk is sure that the e-hryvnia will not enter circulation for the next 4-5 years:
“Ukraine never misses an opportunity to miss an opportunity. Three years ago we had the opportunity to issue e-hryvnia and enter the global arena with our digital currency. We were able to attract incredible investments from people who need these types of assets to the country. for many, because the economy is developing. Half of the world’s population is excluded from banking, but everyone has a mobile phone. We could release an asset that would be used by half the world. But now many have entered the game, and we still don’t have the political will or the fighting team to start implementing this… I came to the NBU many times and said I could do it, I even had software out of the box. But they told me that this is not timely and does not solve the current problems, “concluded Vasilchuk.
The digital currency is breaking the classic financial system. Admission of such coins to the market can be painful for their former players, and the beneficiaries of the system are not interested in this. This slows down the launch of electronic money. But given the development of its market, the system will not be able to resist for long. While the e-hryvnia “collects dust” in draft form, in a few years we can conclude that our market is so full of various electronic currencies that the e-hryvnia will simply not be necessary.
