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Ukraine Completes Pilot for e-Hryvnia National Digital Currency

Ukraine Completes Pilot for e-Hryvnia National Digital Currency

Taking the cue from several countries across the globe, Ukraine’s central bank has also started the development of a pilot scheme for its own national digital currency called the e-hryvnia.

The head of payment networks and innovative growth department at The National Bank of Ukraine (NBU), Aleksandr Yablunivskiy, revealed that the organization has been working on the development of the concept for at least a year, and launched the pilot in December 2018. He said:

“At the end of last year we began a practical pilot, when the instrument was released for NBU employees under current methodology, in order to assess its practical use aspects and the ability of the central bank to realize future projects, as well as getting feedback from users.”

Ukraine’s economy currently is heavily reliant on cash payments, a proposition the government wants to change as expressed by the previous announcements about e-hryvnia.

NBU also claimed that currently there is a plethora of regulators in the cryptocurrency marketspace and urged Ukrainian lawmakers to create adequate legislation and fix this issue while casting a wider net on the cryptocurrency trade. NBU will now calculate its next move and analyze the results of the pilot, Yablunivskiy added.

“We can even say we’ve gotten ahead of global leaders [in national digital currency], given we’ve taken a step in conducting practical research, albeit a small step,” he commented.

He was also keen to specify that e-hryvnia is not a new cryptocurrency: “We are not talking about cryptocurrency; we are talking about a central bank digital currency. It can be implemented with both the technology of a centralized registry and a decentralized one.”

Last month, the NBU revealed development plans for a digital version of its currency which was not based on blockchain tech.

 

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Ukraine Developing a National Cryptocurrency

The National Bank of Ukraine (NBU), the country’s central bank is engaged in developing a national cryptocurrency. Reports indicate that this cryptocurrency will be centrally controlled by the NBU and at parity with Ukraine’s national fiat currency, the Hryvnia (UAH). It is possible the Ukrainian national cryptocurrency will be called the e-hryvnia.

An advisor to the Head of the Association of Ukrainian Banks, Alexei Kushch, says “Many central banks are developing similar national currencies. Now the currency circulation in Ukraine functions in two spheres: it is cash and non-cash, that is accounts in banks. And with the help of Blockchain technology, you can start the third form – digital. Digital money will also be in bank accounts but will be recorded on an electronic wallet. At the same time, due to the Blockchain technology, money will be protected from fraud, hacker attacks, and illegal withdrawal. This is quite a promising direction, which, on the one hand, will protect human rights in terms of property, and on the other – significantly reduce the costs and time of transactions, and accelerate the turnover of money in the country”.

Indeed, fiat payment networks are often prone to hacking, whereas a properly developed cryptocurrency is impossible to hack even with the world’s most powerful supercomputer. This may be particularly important in Ukraine since the country has been in a prolonged war with Russia, which has resulted in the loss of the Crimea and there continues to be an active frontline in southeast Ukraine. Russia has been engaged in cyber-warfare with Ukraine’s banks, i.e. hacking, to destabilize Ukraine, and the results have been devastating. A properly built national cryptocurrency would eliminate threats from Russia, helping to maintain Ukraine’s sovereignty.

The NBU will be able to print the national crypto at will, much like they do with their fiat currency. However, costs of printing crypto are essentially zero, while it costs millions of USD to print fiat currency, so that will save the Ukraine money at a time when they desperately need it. The national crypto will be exchangeable through banks for fiat currency, which will maintain its parity with the UAH, much like how Tether (USDT) is redeemable for USD and that maintains its parity with the USD.

The national crypto that Ukraine is proposing sounds similar to the national crypto the People’s Bank of China (PBoC) is developing. Clearly, national cryptos are becoming a trend, and perhaps in the future, every country will have a national crypto. It makes sense, since cryptocurrency is much faster, has lower fees, and is more secure than fiat currency.

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