Constrained by one goal. When bitcoin will conquer the world

At the end of April in Odessa installed the first bitcoin ATM. It is possible to buy the electronic currency for the hryvnia or sell bitcoins and receive hryvnia for hands. The gesture is symbolic, because the same operations can be easily performed with the help of many online sites, but this event demonstrates the growing interest in alternative Finance in our country.

Ukraine is in the top 10 States by number of active cryptocurrency wallets. “Cryptocurrency, emissions and the rate of which does not depend on the state, many Ukrainians does not seem suspicious, but rather the opposite — it is a reliable means of savings. After all, the state we have traditionally decided not to trust,” says partner and co-founder Axon Partners Denis Shore.

Moreover, in bitcoin prefer to keep their savings, some members of the elites of the country. Thus, the Chairman of the Odessa regional Council Anatoly Urban declared 4.3 million bitcoins (around $7.5 million). About the presence of 465 bitcoins ($814 million) in its Declaration informed the people’s Deputy from BPP Alex mushak. And his colleague — the head of “Internet party of Ukraine”, the MP Dmitry Golubov has declared 4.4 thousand bitcoins (about $7.8 million). But the most interesting — in the Declaration Golubov did note that the purchase cryptocurrency in 2012, he spent about 400 thousand UAH ($50 million). Then the exchange rate of bitcoin to USD was about $11,4, and at the beginning of may 2017 rose to nearly $1,75 thousand That is over the past five years, the assets of the MP has risen more than 140 times.

Digital rebellion

The juxtaposition of anarchic ideology of the traditional financial system, which eliminates the anonymity of payments and provides for the right to issue money exclusively to Central banks, coupled with high technology, just have created the world’s first cryptocurrency — bitcoin. The Creator or group of creators of this system is hidden under the name Satoshi Nakamoto.

Alternatively, a centralized system of payments through banks Satoshi offered to conduct and monitor transactions with bitcoin by using public databases, the computers that serve multiple users of new money. Organized according to this principle, the database is called “blockchain”. It is built according to certain rules formed a chain of blocks of transactions.

Ideas Satoshi resonated with informal groups “Shirobokov”. He called himself a community of IT professionals, passionate about cryptography. One of the values advocated by chiromancy, was the anonymity of the capital. The members of the virtual community with the enthusiasm to develop and improve the bitcoin system, which did not involve the collection of personal information about the participants. The concept of a decentralized currency, free from the dictates of Central banks, also found support among adherents of libertarianism is social and economic ideology which advocates minimizing state control and the expansion of freedoms.

The development of the project began in 2009. After a few months of system operation was the first operation of the exchange of cryptocurrencies for real money — the user under a pseudonym NewLibertyStandard acquired 5 thousand bitcoins for $5.

Today bitcoin is the cryptocurrency with the largest audience. The number of active bitcoin wallets in 2017 amounted to about 11.5 million, and the number of transactions per day close to 350 thousand

But bitcoin every year there are more competitors. The interest of the market is gradually redistributed in the direction of almost 700 other cryptocurrencies. “Total capitalization cryptoeconomy over the past few weeks is rapidly approaching the mark of $50 billion, of which bitcoin is the first time accounts for less than 60%. It speaks to the positive diversification trends scriptaction their owners,” says senior Manager of consulting Department, head of unit, technology Deloitte in Ukraine Serhiy Bondarenko.

Ukraine does not lag behind global trends. In may 2016 in the country appeared first cryptocurrency — crypto-karbovanets (KRB). At the beginning of may 2017 the cost to virtually zero has exceeded UAH 1.

The trick

If the traditional money release Central banks, cryptocurrencies within the planned algorithm cryptocurrency issue is “mined” by users of the system. This process is called mining. In fact it is a competition between connected computers for the right to enter the block transaction into the blockchain (the registry, which stores all records about operations with bitcoin). The winner as a reward gets new coins.

At first glance, the scheme is simple and affordable. However, mining on a personal computer will not bring tangible results. As noted lawyer in the IT&Media company Juscutum Nestor Dubnevich, the system has millions of computers, and to compete with them requires large power, the cost of electricity and good cooling system hardware.

Wishing to experiment can look to alternative cryptocurrencies. For example, besides the crypto-karbovanets. On a personal computer, the user is able to get 5-10 of them per day. Obtained crypto-karbovanets is possible to pay services of mobile communication.

But in any case, speculative transactions with cryptocurrencies hold the promise of much higher profits than using the computer as a “printing press”. “Ukraine has a well developed community which is involved in bitcoin trading, making profits on exchange rate fluctuations”, — said Nestor Dubnevich. According to him, only a week after news of the nationalization of PrivatBank on the site Local Bitcoins, sold the bitcoins in the amount of UAH 2.3 mn.

With dynamics, which in recent years demonstrate the cryptocurrency, can hardly compare with any traditional investment destinations. “From the beginning of 2017, the cost of 1 bitcoin rose to $500, cryptocurrency Ethereum and Ethereum Classic show an increase of 700% and 600%, respectively, Litecoin is more than 500%. In this situation, the working investment strategy — buy and hold,” said the lawyer, ICF Legal Service Viktor Danilov. According to his observations, the one who in the early years created an investment portfolio based on the top cryptocurrencies, has received an increase in assets of not less than 500%.

As explained by Focus senior analyst at FOREX CLUB Andrey Shevchishin, the increasing demand for bitcoins due to global political risk, reduced emission of cryptocurrencies and the possibility of bypassing barriers for withdrawals abroad.

However, predictions about any distant future contradictory. For example, there is a perception that this market is still in its infancy and the coming years will continue rapid growth. But skeptics have expressed concern that cryptocurrencies are not more than bubbles that will soon burst. “In the worst case, bitcoin may lose popularity, and its value will be zero. In the best — reach the popularity of the us dollar and given that the monetary base of the United States is about $4 trillion, a very rough estimate would increase to 150 times,” says a member of the Association of investment professionals CFA Society Ukraine Ilya Pikalov.

But whatever may seem promising growth prospects, before investing in cryptocurrencies is to take into account the possible risks. The risks of investment in cryptocurrency — the probability of loss of funds due to hacking of bitcoin exchanges or wallets and restricting the official use of cryptocurrency due to the lack of legal framework.

Regulatory confusion

The rapid development of cryptocurrencies has become a serious challenge for the traditional financial system. Regulators can no longer ignore this phenomenon. According to Denis Coast from Axon Partners, some countries, such as Japan, are actively developing mechanisms to legalize payments using digital currency, sometimes even with the transfer of regulatory functions to non-governmental organizations. In other countries (China, some US States) bitcoin is recognized as a commodity and not a currency, and Canada imposed a moratorium on the regulation of bitcoin, so as not to interfere with the development of technology.

Cash accepted. In the world established more than 1 thousand of terminals, which may be for cash to Fund bitcoin wallet. In Ukraine such equipment until one

However, in many countries, including in Ukraine, the legal status of cryptocurrencies is not defined. There are also precedents of the official ban of bitcoin and its analogues (Iceland, Ecuador, Bolivia, etc.).

“The legal status of bitcoin and any other cryptocurrency Ukrainian legislation has not yet been settled, and hence do bitcoin users, and regulatory authorities have ample room to maneuver,” — says the Advisor to the AO Spenser & Kauffmann Tatiana Kharebava. According to her, some tax authorities equate cryptocurrency transactions to barter, that is, consider bitcoin as a commodity, and the courts have no uniform point of view — some believe the transaction with bitcoins fictitious, others see them as barter transactions. In response to the inquiry Focus on the legal status of bitcoin, the national Bank cited its clarification dated 10 November 2014, where bitcoin is called a money surrogate, which is not providing real value, and, accordingly, could not lawfully be used in Ukraine as means of payment. However, as noted by lawyers, the clarification is not binding, and only on its basis it is impossible to bring anyone to justice.

It is the uncertainty of the legal status of cryptocurrencies, the main obstacle for their wide use. Many businesses, including high-tech, still prefer traditional methods of calculation. For example, the regional Manager of the company to combine classical crossover (specializing in hiring remote specialists) Sinan ATA told the Focusthat his firm, which operates in more than 100 countries, does not use bitcoins. According to him, when the team consists of professionals from different countries, it is much easier to pay in dollars than in bitcoins and other cryptocurrencies.

Not only money

“Bitcoin supports a huge number of different types of transactions that I made up years ago, — quotes the words of Satoshi in the book “Digital gold” journalist Nathaniel Popper. Among them contracts, liens, arbitration, multi-signatures, etc. If bitcoin is to become mainstream, we need to identify these opportunities, but they must have been foreseen from the beginning.” Now these ideas take real shape.

“In addition to the actual treatment of cryptocurrencies, the blockchain technology used in the banking and financial sectors, healthcare, insurance, philanthropy, public registers, in the provision of legal services, real estate registration, elections and referenda, the allocation of benefits and social assistance, organization of global supply chains”, — says the lawyer of the company Kinstellar Sergey Mikhailik. Among Ukrainian projects based on blockchain he cites the example of a system of electronic auctions for the sale and rental of state and municipal property e-Auction 3.0 and the e-voting system e-Vox.

A particularly promising application of the blockchain in the field of electronic public administration. As noted by Tatiana Kharebava for public projects like a system interesting built-in mechanism for preventing data manipulation — the inability to write or something to change under itself retroactively puts a spoke in the wheel of the corrupt tendencies of officials.

As an example of such mechanism Andrew Shevchishin describes a possible scheme of the operation of obtaining a state contract by the licensee. Based on the blockchain system will automatically check the availability of licenses, permits and compliance with other established mandatory requirements. If it is confirmed that all the conditions will do an automatic command of transfer of funds.

Ukrainian state agencies are already interested in bloccano. In particular, the national Bank in the framework of the project Cashless economy analyzed the possibility of using blockchain technology for the introduction of a new platform for the needs of the market of cashless payments. The first stage is the pilot implementation of the prototype platform and innovative payment tool. To implement a pilot project plan with the involvement on a voluntary basis with the initiative of participants of the payment market. The results of the pilot project, the NBU will decide on a full-scale deployment of the platform.

While the NBU explore the possibilities, State Agency on e-government and technology company BitFury in April 2017 signed a Memorandum on implementation of the blockchain in public administration in Ukraine. Find out the details of this project directly to the Agency Focus failed. Meanwhile, the expert community lay with the initiative of high expectations. “If our plans will be successfully implemented, in the near future Ukrainian state registries, medical services, energy management, administrative services, etc. will be transferred to the system based on blockchain technology,” — said Sergey Mikhailik. In his opinion, this will protect government databases from undue interference, and on the other hand to reduce operating costs and increase efficiency.

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