Bitcoin, among other cryptocurrencies, may soon be used legally in Ukraine, once President Volodymyr Zelensky signs the legislation passed by Ukraine’s Parliament on September 8. This law will protect owners of virtual assets and exchange platforms from fraud, and rumors abound that Ukraine is gearing up to transition to a fully digitized economy and deem bitcoin as legal tender. The legislation will help to determine how Ukraine will regulate the cryptocurrency market in the future as well as officially allow Bitcoin businesses to operate within the country.
Since the creation of Bitcoin in 2009, cryptocurrencies have gone from being a fringe topic and a little-known technology to a prolific financial instrument that has galvanized the public and grown to play a larger role in and reshape our global economy. The cryptocurrency economy is the next trillion-dollar opportunity and is still in the beginning stages of innovation.
The Ukrainian government, or more so the Ukrainian public, understands this opportunity and is driving societal progress towards taking the necessary steps to partake in this economic growth with recent legislation. Ukrainian representatives have reportedly gone to El Salvador to meet with officials there, as the country has already made bitcoin legal tender, to potentially learn more about the implementation.
Bitcoin is a form of currency which is exchanged solely in the digital world and is meant to be completely decentralized from government. This allows users to oversee and approve transactions on the blockchain — a decentralized public ledger — which is a growing list of records that can’t be changed. These open, online ledgers eliminate the need for a trusted intermediary such as a bank.
Drafting pro-bitcoin legislation is an important step for the booming cryptocurrency industry that reflects Ukraine’s public sentiment. Cryptocurrencies are popular in the country and it is estimated that over 5.5 million people, 12.7% of Ukraine’s total population, currently own some form of cryptocurrency, according to payment platform Triple A. The blockchain data firm Chainalysis ranked Ukrainians among the top adopters of cryptocurrency in the world in September 2020.
The bitcoin mining space has interesting implications for Ukraine’s energy sector as Ukraine produces almost half of its electricity through 15 nuclear reactors. Ukraine’s Ministry of Energy argued that bitcoin mining “is a contemporary and efficient way to use excess energy.” The Ministry of Energy has been looking for innovative solutions to tackle the issue of wasting energy and improve efficiency as the sector is plagued with inefficiencies and financial losses.