Tag: inflation

Facing hyperinflation as well as international sanctions that have brought Venezuela to its knees, controversial President Nicolás Maduro has mandated that his recently-developed Petro cryptocurrency become the nation’s second official currency.

Maduro Adopts the Petro as Venezuela’s Second National Currency

The news was announced by Maduro in a televised address today, and will officially be in place by August 20, when the “sovereign Bolivar” will be joined by the Petro. In attempts to combat rampant inflation, the move is set to apparently take five zeros away from the national currency.

In July, the International Monetary Fund (IMF) warned of an economic “collapse” in Venezuela, for which it projects an inflation rate of 1,000,000% by the end of 2018 and a fall in GDP of 18%. This current situation, the IMF says, is comparable to that of Germany during the Weimar Republic or the Zimbabwe crisis at the end of the last decade.

These numbers put the price of a cup of coffee, once worth just 450 Bolivar, at more than one million today. Looked at another way, one million Bolivar is the equivalent of roughly 30 American cents.

“As of next Monday, Venezuela will have a second accounting unit based on […] the value of the Petro.” Maduro said. “It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry.”

Maduro confirmed that the valuations of each currency will come from the Central Bank (CBV). He also hinted at a new salary system built for paying wages using the Petro, as well as new pricing guidelines for goods and services, but no real details were provided in the address. The Petro will be used by the state oil industry, and will also be pegged to the “sovereign Bolivar,” meaning the Petro will be a sort of stablecoin for Venezuela.

“Venezuela is going to have a real official marker […] so that the speculation with the Venezuelan currency is over,” Maduro boasted.

International Perspectives on the Petro

The Petro has been something of a pet project for Maduro, and it’s thought that his plan has been to skirt the harsh international sanctions imposed on his government by conducting international trade with Petro rather than the Bolivar.

There is also evidence to suggest, as NewsBTC reported in March, that the Petro was ushered into existence in part by Russian officials, bankers, and businessmen. The theory is that Russia and Venezuela want to use the digital currency as an experiment in dodging U.S. sanctions placed against both countries.

In April, President Donald Trump, believing the Petro to be simply an extension of credit to the Venezuelan government, issued an order prohibiting U.S. citizens from engaging in transactions using the token. The Treasury Department called it:

“Another attempt to prop up the Maduro regime, while further looting the resources of the Venezuelan people.”

Featured image from Shutterstock.

The post Maduro Mandates Venezuela’s Petro to Become Second National Currency appeared first on NewsBTC.

It is a commonly (but not universally) known fact that the ultimate supply of Bitcoin is capped at 21 million. Unfortunately the same cannot be said for the Venezuelan Bolivar, which is going through a period of currency debasement every bit as bad as the events in Weimar Germany which brought Hitler to power.

As the Venezuelan central bank pumps out banknotes in a futile response to its deepening economic crisis, inflation is set to hit one million per cent this year. Venezuela’s socialist president Nicolas Maduro blames the country’s economic collapse on a US-led “economic war” and sanctions while his critics blame corruption and mismanagement of the country’s huge oil reserves.

The government’s initial plan to cut three zeros off the national currency seemed so unlikely to bring any respite that the Latin American country decided to issue a whole new currency called the “bolívar soberano” (sovereign bolivar) which will be linked to Venezuela’s own cryptocurrency the Petro (as well as cutting five rather than three zeros off the currency unit).

These latest developments follow the dramatic news from earlier this year when Venezuela announced that it would launch a state-backed cryptocurrency named the “Petro”. Since its public mainstream inception, one of the major arguments made in favor for the public utilization of cryptocurrency is that it can be a counter against inflation. The idea stems from the fact that for a particular cryptocurrency, there is and will only ever be a finite supply of said currency that is algorithmically protected. Since these currencies are published on the blockchain, it reinforces immutability; meaning no one can ever change it.

This all provides a perfect theoretical fix to Venezuela’s crisis, but seeing as the people involved with the collapse of the Bolivar are also involved with the Petro, some governance issues must surely be taken into consideration. In Venezuela’s case, it will also mean that the currency will be the first nationally issued currency that is technically impossible to ‘print’.

The technology alone isn’t what interested Venezuela to launch a cryptocurrency. Each Petro will be backed by a barrel of oil from Venezuela’s bountiful hydrocarbon reserves. In theory, this would mean as the demand for oil rises, consumers could purchase virtual IOU’s through the Petro. While politicians and economists remain skeptical about its perceptualized aura versus its actual use, if successful, the Petro could possibly influence other governments or organizations to adapt to this virtual sense of commodity ownership.

According to teleSUR, President Maduro promised “economic reconversion” to the new crypto-backed currency will start on August 20. The Petro has been labeled “illegal” by the opposition-led congress but the president has requested the country’s banks mine and use the Petro as well as ordering several state-owned companies to convert some of their revenue into the token.

Maduro originally stated that 100 million Petros (which he claimed would be worth $6 billion) would be issued. U.S. President Donald Trump responded by imposing new sanctions against Venezuela.

Asides from the Petro, Venezuelans themselves are enthusiastic supporters of Initial Coin Offerings (ICOs). Daria Generalova, co-founder of ICOBox notes “Spanish is an important language for our clients’ marketing campaigns and surprisingly little of this is linked to Spain. Latin American citizens are attracted to cryptocurrencies for two main reasons. Firstly, domestic financial system weakness causes a ‘flight to quality’ of internationally traded assets. Secondly, the political turmoil that leads to such financial crises teaches people that decentralized, ‘trustless’ solutions really are the most reliable way to prevent systemic breakdown like is currently occuring in Venezuela”.

Venezuela is not the only lesser developed country in which cryptocurrencies are in focus. The top five geographical locations where people have been searching for Bitcoin the most, is topped by South Africa followed by Nigeria and Ghana. Search volumes per capita in these countries exceed even states which are famously active in crypto markets such as Singapore and Hong Kong.

Cryptocurrencies can hit the headlines even in countries with moderate popular interest in bitcoin. Iran seems set to follow the Venezuelan example of launching its own cryptocurrency in a bid to overcome trade barriers imposed by the United States. The embrace of blockchain is counter to the Islamic Republic’s bans on crypto exchanges and political accusations that $2.5 billion had been smuggled out of the country to purchase cryptocurrencies.

Anyway you look at it, cryptocurrencies are now a truly global phenomenon and emerging markets can often produce the most surprising news on attempts to innovate in the sector.

The possibilities and ambitions of blockchain are endless and wildly exciting. The emerging tech has huge potential to massively change lives across the globe. However, along with looking into the future, it’s important to keep track of the past and present. It’s often overlooked, but there are already numerous groups that have been affected by blockchain. Here are five that have been significantly impacted:

5. Tech Entrepreneurs

For better or worse, the ICO craze of 2017 completely changed the way startup funding could take place. Semantics aside, it’s difficult to reject the notion that young entrepreneurs worldwide have been empowered by this new form of crowdfunding. Venture funding is very difficult, and studies have shown the process to be highly discriminatory and near impossible for most, especially those living in countries without a large tech presence. Blockchain allows the ideas of great minds worldwide to receive unparalleled support, and many of these ideas are already coming to fruition.

4. Migrant Workers

One of the early goals of Bitcoin was to disrupt the US$500 billion remittance market. For migrant workers, sending money to their families back home in other countries is difficult, expensive, and oftentimes very insecure. The cheap, quick, and worldwide payment capabilities of Bitcoin and other cryptocurrencies makes transferring money to whomever, across whichever border, simpler than ever before. Individuals can pay just pennies to send any amount of money anywhere, a dramatic cost decrease from the 5% fee traditionally associated with remittances.

3. Freelancers

Freelancers, especially online, have historically put themselves in a lot of jeopardy when taking on new projects and clients. The lack of familiarity among the two parties puts both at risk of being taken advantage of, and the nature of these agreements also involves the freelancer trusting the client with a lot of personal information. Cryptocurrency has already radically changed the freelance industry. It now only requires freelancers to give clients a public address, which puts the freelancer at no risk. The global nature of crypto also allows freelancers to connect with clients all over the world. Lastly, smart contracts can even enable agreements between both parties to ensure that neither is taken advantage of or scammed.

2. Citizens of Developing Nations

The global nature of cryptocurrency also created a unique environment for microtasks, now commonly referred to as bounties. Participation in the overarching blockchain community has seen lots of activity from citizens of developing nations all over the world, where the cost of living and average wages are significantly lower than in first-world countries. Activities such as Bitcointalk signature campaigns, airdrops, social media campaigns, and translation bounties enable these individuals to earn significant income (sometimes thousands in USD each month). Many of these individuals have reported their ability to earn monthly incomes of up to 10 times more than their regular work wages.

1. Citizens of Failing Economies

When it comes to blockchain, the most heavily, positively impacted individuals are undoubtedly those who reside in failing local economies. Of course, this is predominantly seen throughout Venezuela, where hyperinflation reaching quadruple digits has drawn real working wages below US$2 a month for those in the country. Cryptocurrency allows these individuals to save what they can when they would otherwise be forced to spend a fiat currency that quickly diminishes to nothing. Use of USD in the country is banned and strictly regulated, and the most easily accessible alternative is cryptocurrency. For individuals in these circumstances, the introduction of Bitcoin and other cryptocurrencies has been life-changing, even life-saving. The crypto community has also played an active role in aiding these individuals. Just days ago, members of the NANO community donated hundreds of dollars worth of NANO to feed a Venezuelan community member and many of the families residing within his neighborhood.

 

Back in April, news.Bitcoin.com reported on a charity called Eat BCH that’s been feeding the hungry in Venezuela with food purchased with bitcoin cash (BCH) donations. Since then the group has also started feeding people in South Sudan where citizens in the East-African region are suffering from economic turmoil and a lack of daily nourishment. With the help of bitcoin cash donations from the community, Eat BCH has truly become a peer-to-peer electronic cash-to-food system that’s starting to spread throughout other regions in the world.

Also read: The Bitcoin Cash Chain Has Less Than Two Years Until the Reward Halving

The Charity Eat BCH Focuses On Feeding South Sudanese Families with Food Paid for With Bitcoin Cash Donations  

The Twitter handle and nonprofit organization Eat BCH has been helping individuals and families in Venezuela by providing them with food to eat that’s purchased with the cryptocurrency bitcoin cash. When a person visits the Twitter page they can scroll through hundreds of pictures showing Eat BCH feeding Venezuelans in need. Each picture says @eatBCH with the date the crew visited throughout various locations like a children’s center or a senior citizens home. So far the Eat BCH team has amassed a whopping 16.84 BCH or $18,427 USD at the time of publication and that money goes a long way in Venezuela.

Now Eat BCH is helping people in South Sudan, a region located in East-Central Africa that is facing significant economic hardships right now. The people in South Sudan have a lack of necessary supplies like good water, food, and there’s a shortage of money. The region is currently dealing with a civil war and over the past few weeks, mainstream media has been focusing their attention on the “horrific” and “heartbreaking” stories taking place in South Sudan. The crew at Eat BCH has decided to help individuals and families from South Sudan and they have been focusing their efforts on feeding people living in the African territory this week.

On the first day on May 31, the Eat BCH team stated it was rainy in Sudan but over 50 people came to eat food that day.

“Our first day – and a rainy day – and the line is out the door! Over 50 people came to eat today,” explained the charity.

The economic crisis has put pressure on every family in South Sudan so we are finding our way to help where we can. This is how communities come together!

As the South Sudanese Pound Faces 11,000% Inflation, the Utility Phase of Bitcoin Cash Emerges  

The pictures that follow show Eat BCH feeding the Sudanese people for the past three days. Many people are pleased to get a warm meal bringing their own bowls, Eat BCH explained. On June 1 they served ‘Adas’ or spiced lentils and rice. The same day South Sudanese children lined up to share food and were excited to see the how bitcoin cash donations purchased all of the meals. The South Sudanese pound (SSP) suffers from 11,000% inflation Eat BCH emphasized.

Moreover, that day the CEO of Coinbase, Brian Armstrong, who has written extensively on the subject of cryptocurrency and charitable giving, gave a shout out to the Eat BCH team on Twitter. “In terms of crypto helping people (the utility phase emerging) this is pretty awesome,” Armstrong said on Friday.

What do you think about the charity Eat BCH? Let us know what you think about this subject in the comment section below.

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Images Via @eatBCH_SS

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According to Google’s currency convertor, 1 Satoshi now equals nearly 6 Venezuelan Bolivares Fuertes (VEF). A Satoshi is 1/100 millionth of a Bitcoin (0.00000001), and is the smallest possible unit for the cryptocurrency.

It is remarkable that a Satoshi far exceeds the value of a VEF, and is a good indicator of just how extreme hyper-inflation has gotten in the South American nation. A Satoshi is not a lot of money, only equivalent to 0.000075 USD. One USD is equivalent to a whopping 80,000 VEF, which is quite close to the largest denomination VEF banknote of 100,000.

The economic crisis in Venezuela started under the reign of Hugo Chavez due to overspending and price controls, and drastically deepened in 2014 when the price of oil collapsed since most of Venezuela’s income was from oil drilling.

In order to balance overspending and debts, the government of Venezuela began printing VEF at will, leading to a rapid rise in inflation starting in 2012. By late 2014 the currency lost over 90% of its value, sending the economy into a tailspin as citizens lost their life savings. This is one of the problems Bitcoin was made to solve, since it is decentralized and can’t be printed at will like governments so often do with their local fiat currencies. This characteristic of Bitcoin conserves its monetary value and makes it safer than most fiat currencies in the world.

Inflation rates have been increasing in Venezuela ever since the crisis started in 2012, now exceeding 7,000% annually and on track to reach 13,000% this year according to the United States Department of Labor Statistics. The end result is people using wheelbarrows full of cash to go grocery shopping.

The Venezuelan Bolivar Fuerte is obviously near the point of total collapse and could end up going the way of the Zimbabwean Dollar which was abandoned and became completely worthless in 2015. In Zimbabwe, citizens sought out other currencies to use for their money, mainly the USD, but Bitcoin has become another popular monetary refuge.

Indeed, this past year Bitcoin trading volume in Venezuela has skyrocketed on Localbitcoins, which is a peer to peer Bitcoin trading website. Over 3.9 trillion Bolivares Fuertes were traded for Bitcoin last week on the website, and of course, this doesn’t include all the other Bitcoin transactions outside of the website. Clearly, Venezuelans are moving their money into Bitcoin more so than ever before.

Bitcoin is in a good position to become a primary currency for desperate Venezuelans who have been tortured by years of hyperinflation. While Bitcoin can be quite volatile and sometimes drops overnight, Venezuelans will rest a lot easier at night knowing their money is in Bitcoin since it does not drop each and every night with the consistency or magnitude that the VEF does, and in the long-term Bitcoin has been going up.

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The post In Venezuela a Satoshi is Now Worth Far More Than a Bolivar Fuerte, and Venezuelans Are Moving Their Money Into Bitcoin appeared first on BitcoinNews.com.

Over the past few months of 2018 flying under the radar, there’s  a new charity aimed at feeding Venezuelan citizens and their children — a group called ‘eat BCH.’ The group has been getting a lot of bitcoin cash (BCH) donations towards feeding the hungry from within the country’s troubled economy. The donations are proving how perfect a peer-to-peer electronic cash system can be for those in need.

Also read: Markets Update: Cryptocurrency Prices See Some Slight Recovery

‘Eat BCH’ Feeding Venezuelans With Bitcoin Cash

The Venezuelan economy has been suffering from hyperinflation and a turbulent economy which has left ordinary citizen living on the streets hungry and unemployed. The country’s currency, the bolivar, is so worthless individuals don’t even count the cash anymore; they weigh the fiat stacks on a scale. Over the years since Venezuela’s turmoil has continued to worsen, people have noticed the use of cryptocurrencies has been helping citizens in the region. People and groups from all around the world have been donating to Venezuelans in need, and the country’s citizens have been mining cryptocurrencies as well.

Now a new charitable cause called ‘eat BCH’ has been offering help to Venezuelans suffering from difficult economic times. The group has been collecting bitcoin cash donations for the past few months and have been using the funds to purchase food and feed Venezuelans who are in need of assistance. Nearly every single day for over three months the group’s Twitter handle shows pictures of children and adults getting all kinds of food — and it’s all paid for with bitcoin cash. Many of the Venezuelans in the photographs have the biggest smiles on their face showing how grateful they for the food.

The ‘eat BCH’ group also explains how thankful they are for the BCH community at large for promoting economic freedom and helping Venezuelan citizens. The anonymous Twitter-based charity states on March 11:    

We have a peer-to-peer electronic cash-to-food system

BCH Donations Making Venezuelan Lives Much Easier

The charity solidifies how bitcoin cash can bypass sanctions, banking blockades, and governments, and turn those funds into food that feeds people. “This whole project has shown not only what it’s possible to do with bitcoin cash but also the generosity of the BCH community as a whole,” ‘eat BCH’ explains to its followers. Many of the pictures ‘eat BCH’ shares show children eating food paid for with BCH, the group handing out food bags, and every Saturday the team delivers food to a Venezuelan nursing home.

On March 24 the charitable group ‘eat BCH’ gave food to a group of women at least one child and explained the donations made their lives much easier. The team states that day:

We delivered some of the food bags to needful mothers in this community today — All of these women have at least one child to take care of. Your BCH donations made their lives much easier — Thank you.

So far the ‘eat BCH’ team has received over eight BCH and has documented every time they went out and fed people. Eight BCH may not seem like a lot of money in areas like the U.S., but even a hundred dollars can feed large groups of people in Venezuela. The BCH community has been thrilled to see bitcoin cash in action feeding people in need from within a country suffering from such a disastrous economic situation. One particular group was searching through the garbage looking for food and thanks to the kind donations stemming from BCH proponents they were fed fresh food that day.   

What do you think about the eat BCH charity? Do you think that cryptocurrencies are a great way to promote economic freedom? Let us know what you think about this subject in the comments below.

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Images via the @eatBCH Twitter page. 

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El Petro, the Venezuelan cryptocurrency, can now be purchased with Russian rubles, among other fiat currencies, President Nicolás Maduro announced. Companies from many countries, including the United States, want to buy the oil-backed crypto, he added. Venezuela’s head of state also said he decided to denominate the national currency, the bolivar. 

Also read: Venezuela Recruiting Citizens to Mine Cryptocurrencies

Yuan and Bitcoin Also Accepted

Starting from March 23, all citizens and enterprises will be able to buy petro with Russian rubles, Chinese yuan, Turkish lira and euro, as well as with cryptocurrencies like bitcoin, ethereum and NEM,” Venezuelan President Nicolás Maduro said, speaking to local TV. During the 30 days of the pre-sale of the petro, almost 201,000 orders from 133 countries have been placed, totaling $5.25 billion USD. “We are just starting”, Maduro said, adding that many businesses, including American, have declared intentions to purchase the Venezuelan cryptocurrency.

“Companies willing to buy petro come from Colombia, Spain, Mexico, Argentina, Peru, Turkey, Germany, Russia, China, Ecuador, and Chile,” Venezuela’s head of state revealed, quoted by RIA Novosti. His statement comes days after US President Donald Trump signed an executive order banning American citizens and legal entities from any transactions with Venezuelan cryptocurrencies.

Venezuela released its oil-backed petro in February, thus becoming the first country with own cryptocurrency supported by petrol reserves. Earlier Nicolás Maduro announced the country had collected $735 million USD through the pre-sale.

Recently, reports came out that Russia might have been involved in the development of the petro. A Time investigation revealed circumstantial evidence connecting Moscow to its launch. Russian officials have denied the claims. Through its spokesman, the Finance Ministry stated it had nothing to do with the creation of the petro. Artem Kozhin said all such speculations were “outright lies”. He also called the “pseudo investigation” a “fake sensation”.

Maduro Denominates the Bolivar in the Name of Stability

“I’ve decided to remove three zeros from the current money and replace these bills with new ones”, Nicolás Maduro announced. The national fiat will be denominated “to guarantee the country’s economic stability”, in his words. The Venezuelan president showed new specimen banknotes, which will be officially released on June 4, 2018.

For the first time in years, coins will be minted in Venezuela whose currency has been suffering from hyperinflation. 50 céntimo and 1 bolivar coins will be issued along with 2, 5, 10, 20, 50 и 100-bolivar paper notes. A special emission of bolivars will feature the national heroes Francisco de Miranda and Simón Bolívar, on 200 and 500-bolivar bills respectively.

The extremely high devaluation of the bolivar in recent years has forced Venezuelans to mostly use bank cards. One US dollar currently trades for about 230,000 bolivars on the black market in Caracas. Several days ago financial authorities issued 100,000-bolivar bills to relieve the cash deficit.

Do you think the petro can actually help stabilize the national fiat currency of Venezuela or it will simply increase its devaluation? Share your thoughts in the comments section below.     

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Africa is rarely considered to be one of the larger markets for cryptocurrencies, but with the right factors in place — such as an increasingly tech-savvy populous and inflation triggered by central banks — that might be set to change.

Case in point: The surge in popularity of cryptocurrencies has contributed to the opening of at least 15 new trading venues in South Africa within the past year alone. And peer-to-peer marketplaces also recorded a surge in trading volumes as Bitcoin’s price reached historic highs at the end of last year.

Global wallet and exchange Luno reported 2000 BTC worth of transactions in November 2017, when the coin’s price was hovering in the $10,000 range, and approximately 37% of those transactions occurred in South Africa. Luno began operations in 2013 and boasts 1.5 million users spread across 40 countries — including Indonesia, Malaysia, Nigeria, South Africa, and the U.K. The company has big plans: By 2025, it plans to reach 1 billion customers. To put that in context, North America’s largest cryptocurrency exchange, Coinbase, had 11.7 million users last year. 

The South African government is also making moves. The country’s central bank has launched a program that will trial JPMorgan’s Quorum blockchain in interbank clearing and settlement. According to an official statement dated February 13th, the South African Reserve Bank (SARB) revealed it has established a fintech program that will prioritize, among other things, a project dubbed Khokha to explore a proof-of-concept (PoC) using the tech.

Why is Africa Becoming Such a Big Market?

First, conditions in the continent are conducive to the adoption of cryptocurrencies — with many countries in the continent such as Zimbabwe, South Sudan, and Nigeria, suffering from rampant inflation. What makes cryptocurrencies so appealing is their decentralized method of operation, permitting them to become alternatives to fiat currencies that have been de-railed thanks to disastrous central banking policies.

Second, the increasing use of mobiles and other computing technology within the continent has helped its population become comfortable with cryptocurrency technology. New businesses that use blockchain are emerging all the time: Kenya-based BitPesa, for example, is a payment platform and money transfer service that works with 60 banks around Africa and has seven mobile wallets on its platform.

Third, the threat of government regulation, which has roiled cryptocurrency markets recently, is (presently) fairly low in Africa. While governments and agencies have warned about the dangers of investing in cryptocurrencies, regulators in African countries have taken a hands-off approach to trading at exchanges.  

But Africa is susceptible to the same pressures as cryptocurrency markets in other parts of the globe: Cryptocurrency traders in Africa were paying a premium of as much as 40% in 2017. According to reports, the premium occurred due to a shortage of liquidity, meaning sellers were able to command unrealistically high prices due to high demand from buyers.

Outside the continent, other countries are also looking to cryptocurrencies to help solve their financial woes. Earlier this year Venezuela, which has been crushed by quadruple-digit inflation, announced plans to develop its own token, the Petro, in attempts to turn things around.

The post Cryptocurrencies Surging in Africa as Alternatives to Traditional Banking appeared first on NewsBTC.

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Keywords like „Бiткойн“ (Bitcoin) and „майнинг“ (mining) have climbed to the top 5 of the “What is…” category in Google Ukraine’s 2017 Zeitgeist report, local media have announced. Queries like “Why did gas go up?” and “Why do we live?” also feature high up in the list – the country has been dogged by economic woes while fighting a bitter civil war since the “Maidan”. And with Ukrainians anxiously awaiting new legislation to regulate/legalize Bitcoin, “I need a spinner” has also made it to the top of the search engine statistics… Fidget spinners, as we know, have a certain nerve-soothing effect.

Also read: Ukraine Drafts Law to Exempt Crypto Income and Profits from Taxation

Bitcoin Spins Its Way to the Top of Ukraine’s Search Queries

Freedom is taking a toll on Ukraine, both socially and economically, as Kiev steers the boat towards Western ports with its anchor still buried quite close to Russian shores. The country has been reporting unhealthy inflation since the troubles began in 2013. According to the State Statistics Service, consumer prices have increased by 13.6% year-on-year in November (almost 18% for food). Ukrainian GDP growth rate has averaged -0.09% (yes, that’s a minus) for the past seven years, Ukrstat figures show.

Cryptocurrencies present a fresh alternative to the constantly depreciating national currency, the Hryvnia “₴”, as other troubled nations around the world have already discovered. And despite some institutional reluctance, there have been attempts to push through legislation that would legalize and regulate the cryptocurrency ecosphere in Ukraine. Officials hope to attract significant foreign crypto investments to improve the business climate, support the Hryvnia, and increase growth.

Legally, Bitcoin is still in the Twilight

With interest towards cryptocurrencies growing in Ukraine, official Kiev is yet to provide an adequate response to the arising challenges. Currently Bitcoin is neither legal, nor illegal. Its status is still subject to a debate that has been prolonged by the absence of a consolidated government approach. The National Bank of Ukraine has been doing what most central banks in Eastern Europe have – issue strong warnings of the “extremely risky nature” of cryptos that are “definitely not currencies”. Through public statements its representatives have made it clear that Natsbank will follow closely European regulators and the world’s leading central banks to formulate its policy.

Ukrainian media have been wondering whether the bank would do something after regulators in the US accepted bitcoin as a commodity and allowed futures trading. But in the meantime their colleagues in Kiev have narrowed down the alternatives: “They’ve already said that cryptocurrencies are neither digital money, nor securities. Commodities have not been mentioned but they’ve talked about financial assets,” technology entrepreneur and cryptographer Pavel Kravchenko said, quoted by 24 Kanal.

A couple of months ago, though, Ukraine became the first country in the post-Soviet space to draft dedicated legislation to legalize cryptocurrencies and regulate possession, trade, payments and other transactions. No less than three bills have been making their way through Ukrainian parliament since October, as the official website of the legislature shows.

Bills Advancing In the Rada, No Decisions Yet

A Law “On the Circulation of Cryptocurrency in Ukraine” was submitted to the Verkhovna Rada on October 6. Its main purpose is to legalize bitcoin, as reported by Ukrainian media. The draft provides legal definitions of basic terms like cryptocurrency, blockchain, mining etc. It also contains an explicit disclaimer – neither the central bank, nor the executive power in Kiev would bear responsibility or provide protection against any risk associated with cryptocurrencies.

Exchanges, however, will have to implement “know your customer” procedures and maintain comprehensive records of all transactions. The bill also amends the Ukrainian Tax Code, covering another important aspect of the bitcoin legalization process. It adds several paragraphs referring to income from mining operations and cryptocurrency transactions. Initial reports of tax exempts for miners have not been confirmed yet.

An alternative bill “On Stimulating the Market of Cryptocurrencies and their Derivatives” was introduced by Ukrainian legislators on October 10. It expands the legal definitions to cover crypto derivatives, obviously, as well as cryptocurrency investments. The framework proposal, prepared in cooperation with representatives of the bitcoin community, treats cryptocurrencies as “objects of property rights” – a legal status that would allow for barter deals in exchange for other goods and services. A supplementary draft law “On Amendments to the Tax Code of Ukraine (regarding the stimulation of the cryptocurrency market)” has also been submitted by the end of the month.

Completion of Legal Procedures to Take at Least 6 Months

All three bills have so far overcome major hurdles advancing through parliamentary commissions, including those dealing with financial and banking matters, economic policy, and customs regulation. Members of the European Integration Commission have also discussed the drafts. The cryptocurrency laws have been included in a report that explores the implications of new legislation on the state budget. But the completion of the legal procedures is likely to take at least six months, as the Cabinet of Ministers and the National Bank have to produce their own subordinate statutory instruments to implement the new laws. As it transpires, by the time Ukraine legalizes bitcoin, Russia may have become the first ex-Soviet country to introduce its own version of “legalization”.

Nevertheless, Ukraine has been the first to target local and foreign crypto investors with incentives, including, but not limited to, lower electricity rates and tax exemption. Both private individuals and corporate bodies will be able to run mining and trading operations and take advantage of them. The scope of the benefits will be determined after the adoption of the main legislation. But even now, foreign nationals willing to invest in Ukraine’s crypto sector can register a limited liability company in Kiev for as little as $100 – Google it! A $100,000 investment will be rewarded with a Ukrainian passport.

Do you think that Ukraine will legalize or ban bitcoin and what do you think the legal status of miners in Ukraine will be? Let us know in the comments below. 

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Thousands of people have begun turning to the world of cryptocurrency to salvage what little value remains in their currency.

Inflation is nothing new to Zimbabwe, now however, even Bitcoin is feeling near on 100 percent inflation amid political upheaval.

Venezuela is not the most pleasant country to live in right now. Hyperinflation in the region is soaring to new heights virtually every quarter. It does not appear the central bank has any option to solve this platform anytime soon. Things are only getting worse as more time progresses. It is not entirely surprising to … Continue reading Worsening Inflation In Venezuela Continues to Drive People Toward Bitcoin and Cryptocurrencies

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It is evident the inflation in Venezuela is reaching troublesome heights. The country has been dealing with financial turmoil for quite some time now. Mismanagement of funds and a government incapable of improving things are some of the contributing factors. Bitcoin can make a positive impact in Venezuela, even though the local government is rather … Continue reading Inflation in Venezuela Reaches Alarming Heights, but is Bitcoin the Answer?

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In the world of cryptocurrency, there are two main types of ecosystems. Either a cryptocurrency is inflationary – with new coins generated by mining or staking – or it is deflationary. A lot of people claim bitcoin’s deflationary status is a problem, and how minor inflation could alleviate these concerns. However, there are different aspects of either concept that need to be taken into account first.

2. Deflation

Most cryptocurrency enthusiasts are well aware of how bitcoin has a fixed supply cap of 21 million coins. It is expected the last bitcoin will be mined around the year 2140, even though a large portion of the available supply is in circulation already. Some financial experts claim bitcoin’s capped coin supply is a problem, as it makes the popular cryptocurrency deflationary. Since no additional coins will be brought into circulation from that point forward, there will be no more inflation for bitcoin.

Deflation in the traditional financial ecosystem is a bad thing. Then again, cryptocurrencies such as bitcoin cannot be compared to any other currency in the world, thus making it a rather moot point. It is also a  clear indication of how most economists are stuck in their old ways of thinking. Deflation is often associated with economies that not performing all that well. In most cases, deflation leads to falling prices. If that were to happen to bitcoin, things could go from bad to worse rather quickly.

One thing to keep in mind is how during times of financial hardship, consumers are not investing but flocking to liquid currency. For bitcoin, that could be a good thing, as it may even lead to future prosperity. From a long-term perspective, deflationary currencies are by far the better option. In bitcoin’s case, deflation will – probably – cause a rise in value. There is no real reason to think deflation is bad for bitcoin by any means.

1. Inflation

Every major traditional currency known to man is inflationary. There is no hard limit as to how many US Dollars, Euros, or Pounds Sterling there can be at any given time. Central banks can use a technique called “helicopter money” to introduce more bills and coins to an ecosystem if they see the need to do so. With more money to go around, they hope to improve the financial situation for their specific region.

Inflation also has a nasty side effect that most people tend to overlook. As the supply of an available currency continues to grow, it makes the previously existing supply worth a bit less. In the world of cryptocurrency, there are two types of inflation: proof-of-work and proof-of-stake. The first option makes bitcoin an inflationary currency until all 21 million BTC have been generated. Proof-of-stake allows for a virtually unlimited coin supply even when there are no longer mining rewards to be distributed.

Although a lot of people see no harm in inflationary cryptocurrencies, it provides a bit of a problem when it comes to estimating a coin’s value. Since there are more coins every day, inflationary cryptocurrencies cannot be labeled as a store of value per se. Interestingly enough, some of the major cryptocurrencies have decided to take the inflationary approach, including Ethereum – switching to proof-of-stake soon – and Dash. Other currencies, such as Litecoin, have taken the same model as bitcoin, effectively limiting their supply. From a store of value point-of-view, deflationary cryptocurrencies are the better option, by the look of things.

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