BITCOIN: TO BE OR NOT TO BE IN UKRAINE.

Apparently, there is no person in Ukraine who would not have heard of bitcoin.

There probably is no person left in Ukraine who would not have heard of bitcoin.

There are a lot of talks about bitcoin and even those, who don`t know how to use a computer still discuss the web-currency. And those who are able, are already ready to engage in “mineing” (the creation of bitcoins), and to carry out various operations with it with the help of “blockchain” technology. The curiosity of the citizens is heated by rumors of the crazy wages of the happy owners of bitcoins, and therefore, the rest can only dream of treasured electronic coins and unbelievable wealth.

The supporters of cryptocurrency, to which the bitcoin belongs, promote them as a currency that works transparently, freely distributes and is “firm” since no state can “print” or otherwise inferior to bitcoins, they have reliable protection from counterfeiting, they can be instantly and anonymously settled anywhere in the world in the presence of an Internet connection, cryptographic operations are irreversible.

In the wake of this euphoria, on May 30, 2016, the first Ukrainian crypto currency appeared – Karbovanets (Ukrainian Karbowanec or KRB).

But is everything as rosy as it may seem at first glance?

Let`s note that bitcoin, like other similar cryptocurrency, is just a set of data, though carefully protected against tampering and copying with various cryptographic (encryption) methods, however, it does not have any legal status in Ukraine. And as it is not regulated nobody will be held liable for unlawful actions against cybercurrencies, regardless of their value.

At the same time, the demand for cryptocurrency increases every month. It happens, first of all, due to the possibility of anonymous payments for goods and services, which always will be the subject of interest to criminals, corrupt businessmen of various types who are trying to organize illegal business, and sometimes, in general, use the indicated payment systems in unlawful activities.

And although Ukraine is somewhat behind the international processes in this area, several bills have already been registered in the Verkhovna Rada to resolve the problem with the legal status of virtual currencies, including the bill number 7133 “On the circulation of cryptocurrency in Ukraine”. This bill, among other things, makes it is clear that the use of cryptography can not be applied against the grounds of Ukraine’s national security, for calls for the overthrow of the constitutional system, violation of the territorial integrity of Ukraine and committing acts of terrorism, financing of terrorism, the legalization (laundering) of proceeds from crime way, narcotic drugs, psychotropic substances, their analogues or precursors and other illegal acts.

The legislator is emphasis on a clear ban on the use of cryptography in such painful areas for Ukraine on purpose. There was an experience of virtually open electronic fundraising to provide mercenaries around the world, in particular through Russian payment systems, the provision of so-called services for the processing of funds or their transfer to any region within Ukraine (including for the occupied Donbas and Crimea) and abroad, especially under anonymous drug deals.

At the same time, if you look around the other side of this “crypt-currency”, there is a number inevitable issues, in particular, how to deal with theft of crypto currency or error with the address of the recipient, because what initially seems to be an advantage is the irrevocability of operations with crypto-currency , in the case of illegal or false operation with the latter is a problem, since it is impossible to cancel the transfer – it fell into blockchain, there it will remain.

Another common problem for crypto currencies is the loss or theft of a wallet, as crypto-currency accounts can be stolen using viruses or other malicious software, or they may disappear because of a hard drive crash. The most advanced users write a copy of the secret key and order the hardware USB-wallets, but this is not a security guarantee.

One more problem the creators of numerous dishonest projects related to the creation and release of new crypto-currency (such an investment attraction is called ICO – Initial Coin Offering), whose sole purpose is to earn a trusted admirers of such virtual money, according to the old scheme of the so-called “pyramids” . Such efforts are greatly facilitated by the fact that the market of cryptocurrency is not regulated, there are no objective mechanisms for risk assessment, no return guarantees are provided, except for the “honest” words of the author of such a project.

At the same time, if for creation of the first bitcoins there was enough to have a regular computer, in the future, the necessity to increase the system power at the expense of more powerful computer equipment is constantly rising, and at present, the process of creating bitcoins without specialized processors is completely unprofitable.

Summarizing all the above, it is possible to make one undeniable conclusion: Ukraine has no right to ignore cryptocurrency that are already sold and bought out of regulatory and fiscal control, so the state does not receive a single penny. And whether the legalization of the circulation will cripple the inflow of investments and revenues to the state or local budgets at the expense of taxes and fees from this activity, or will drag Ukrainians into another loud pyramid like “MMM”, the story will show …