Politics 2022-09-15T04:47:46+03:00
Ukrainian news
Mykola Udianskyi: Cryptocurrencies are the future of the global financial market

Mykola Udianskyi: Cryptocurrencies are the future of the global financial market


Mykola Udianskyi Ukrainian IT businessman, co-founder of the Coinsbit crypto exchange (sold in 2019), creator of the Bitcoin Ultimatum fork, and one of the Forbes top 100 richest Ukrainians rating in an interview with RBC-Ukraine spoke about the current situation of the crypto market, the legalization of digital currencies in Ukraine and how the state is digitizing the country.

- Bitcoin was in all the news in the spring, but now almost nothing is heard about it. What is happening to it now and to the cryptocurrency market in general?

- Bitcoin is doing fine. Of course, it does not cost $ 60,000 now as it did back in March, but in September its rate rose to $ 50,000 and this is an excellent result. Bitcoin is not going anywhere, it has become part of the financial world and will remain forever. It triggers the entire cryptocurrency market and sets the rate of growth or decline for other cryptocurrencies. Cryptocurrencies are the future of the world of money. At its formation, the crypto market was like the Wild West, a place where everyone did what they wanted. But now, it has embarked on the path of regulation. That is why on September 8th, the Verkhovna Rada launched the process of legalizing the cryptocurrency market in Ukraine.

- Tell us more about this. Why hasn't the parliament legalized cryptocurrencies yet?

- The only country that has legalized cryptocurrencies is El Salvador. But they did it hastily, and therefore this decision did more harm than good. Now, this country may be left without external borrowing, which will eventually bring down its economy.

Ukraine follows a different path - unhurried, thoughtful, and as legal as possible. So far, the parliament has passed the draft law “On virtual assets”. It clarifies what cryptocurrencies are and gives them legal status. In the future, owners of digital assets will be able to legally buy and exchange them. But this is still a basic document and needs some work.

- What modifications are you talking about?

- When it comes to cryptocurrencies, all that officials care about is taxes. Therefore, the next step of Ukrainian parliamentarians is the taxation of digital assets. For example, the adoption of the bill “On Amendments to the Tax Code of Ukraine regarding the taxation of the turnover of virtual assets in Ukraine”.

The main purpose of this document is to stimulate the development of the crypto market in the country with the help of special tax breaks. They plan to exempt the cryptocurrency business from VAT and establish a five-year preferential regime for it, according to which income tax for legal entities and individuals will be only 5%. For the latter, a military tax of 1.5% is added. You will have to pay tax only on profits. And everything that happens on the exchange is of little interest to the regulator.

- Let's talk about crypto exchanges. How many are there now in Ukraine and why are they needed?

- Today, there are several large exchanges in Ukraine. It is difficult to name the exact number since many of these sites are not registered in Ukraine per se, and yet, they work with hryvnia.

What are they needed for? Primarily for trading cryptocurrency and withdrawing it to fiat. There are, of course, also online exchangers and cryptomats, but they perform a limited set of functions. For example, exchangers are used to quickly transfer cryptocurrencies into hryvnia. And bitcoin ATMs are for replenishing a bitcoin wallet.

Crypto exchanges are full-fledged cryptocurrency platforms with a wide range of additional functions, such as derivatives. In simple terms, a crypto exchange is a digital version of the stock exchange, except that instead of trading stocks, you trade tokens.

- And how can exchanges be useful to ordinary Ukrainians? After all, they are quite difficult to use.

- In fact, it’s not as difficult as it seems. Perhaps long ago, the process of buying and storing bitcoins was incredibly confusing and required a variety of technical knowledge. But these times have sunk into oblivion. The industry has embarked on the path of mass adoption and is trying to simplify everything as much as possible.

To facilitate the purchase and use of digital currencies, crypto exchanges are now actively cooperating with both banks and various payment systems such as Visa and Mastercard. Thanks to these collaborations, they release applications and payment cards that have cryptocurrency on their balance sheet but that can freely be converted into UAH.

Plus, if a person buys, for example, bitcoins, they can then spend them at any time, simply by placing their card or smartphone on the terminal in a store or cafe.

If cryptocurrencies are finally legalized, exchanges will be able to refuse intermediaries and will provide their services directly. It will accordingly be easier, faster, and cheaper than it is now.

- Everyone has heard the story of the man who spent 10,000 BTC to buy pizza. Everyone knows how to spend money, but what about earnings? Is it possible to make money on cryptocurrencies? If so, how can you do it?

- There are many options for making money in the cryptocurrency industry. The easiest and most reliable way is to buy the cryptocurrency and wait for it to rise in price. For this, they even came up with a term - HODL.

There are also cryptocurrency “faucets”. These are sites where you are given a few coins for certain actions. If you are persistent, you can accumulate a good amount over time.

Previously, it was possible to make good money on ICOs, but now this topic has outlived its usefulness and it is better not to get involved with such projects.

Also, not so long ago, mining was quite profitable. But because large companies began to stray into pools, it is now difficult to make money here. You can try to mine less popular coins, but the video card manufacturers have inflated prices so much that it will take a very long time to beat off the purchase.

And now, even games on blockchain have begun to emerge, where you can sell game items or resources for cryptocurrency. But all these projects are rather in their beta phases and you might just be wasting your time on them.

Other means to earn that are associated with crypto exchanges: staking and trading.

Staking is like a bank deposit. The user keeps his cryptocurrencies in a special wallet or exchange, and when he does not use them - he receives passive income.

Finally, trading is digital asset trading. There are many tactics and strategies for trading cryptocurrencies, but they all boil down to one thing - buy at a lower price and sell at a higher price. The principle of speculation works in all markets, without exception.

- It turns out that most of the ways to make money are somehow connected with exchanges?

- Undoubtedly. Exchanges are the door to the world of cryptocurrencies. They can be used to trade, invest, and withdraw virtual assets into cash. The main thing is to not get involved in leveraged trading. The basic rule of trading is not to invest more than you are willing to lose.

- Mykola, your activity is connected not only with cryptocurrencies but also with IT technologies. What do you think about digitizing Ukraine using the Diia application?

- The idea is excellent, but the Ministry of Digital Science has problems with its implementation. Take COVID certificates for example. This document should make it easier for Ukrainians to travel abroad, but not everyone can get it in digital form. For some reason, the ministry tied this document to Diia and many Ukrainians simply cannot download it to their phones.

But overall, the app has potential. Now, it has a limited list of services: driver's license, passport, identification code, etc. But in the future, it is planned to expand its capabilities significantly. More than ten new services will soon be added to Diia, which should eradicate paper documents and bureaucracy. For example, in the application, it will be possible to issue subsidies, social assistance, and pensions.

- Are there similar applications out there in the world?

- I got the impression that Diia's developers focused on the most popular application in China - Wechat. It is not only a messenger and social network, but also a service for ordering tickets, calling taxis, and a mobile wallet. However, with the help of Wechat, you can pay for various services which is a feature that is not yet doable in "Diia".

All things considered, it is worth giving our Ministry of Digital Transformation absolute credit.  It did a great job creating an application that has no analogues in the world. All the specialists of the ministry have done a crazy, fantastic job, and deserve all the praise, because they have taken a huge step towards the development of Ukraine's digitalisation.

- Do you think that Diia needs to be made into a payment instrument?

- Why not? Especially since the state has been thinking about the introduction of e-hryvnia for many years. It would be a good idea. But in addition to government money, I think it is logical to add support for cryptocurrencies. For our part, we are ready to help the Ministry of Digital Development and propose our own developments in this direction. Diia must support cryptocurrencies.

- Do you have experience cooperating with government agencies?

- We are already cooperating with the Ukrainian authorities. Our company Prof-IT is just finishing the development of a new Ukrainian cryptocurrency exchange. The project was named Qmall. IBOX Bank will be responsible for payments. It will provide input and output of hryvnia with a minimal commission. Its launch is scheduled for October-November 2021. After that, Ukrainians will be able to receive the bank cards of the exchange.

The uniqueness of the project is that it will be the first Ukrainian exchange, fully regulated by the Ministry of Finance and the National Bank. Plus, we are also developing a serious platform for one of the ministries. I won’t get into the details, but you can be sure that it will be a big breakthrough for Ukraine.

- How important is it for Ukraine to have a regulated, legitimate crypto exchange?

- A legal Ukrainian  crypto-exchange is absolutely necessary. Trading on foreign exchanges like Binance is very dangerous. There are many known cases when accounts are frozen there and people can no longer access their money. Internal hacker attacks often occur on these exchanges. Therefore, it is imperative that the exchange is Ukrainian so that it has its own office in the country. This is an additional guarantee of safe investment and safe work with cryptocurrency in Ukraine. In addition, the advantage of it being a domestic exchange will count as training in trading operations and increase financial literacy when working with cryptocurrency. Finally, there will be no coins on this exchange that were created only to scam people for money.

- How would you generally assess the digital progress of Ukraine?

- We are moving into the digital world at full steam. Ukraine is one of the world leaders in the circulation of cryptocurrencies. It is likely that in a few years, cryptocurrencies will fully enter the everyday life of ordinary Ukrainians and everyone will be able to earn money through them.

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