Ukraine Developing a National Cryptocurrency

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Ukraine Developing a National Cryptocurrency

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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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