FINTECH: Bitfury and Ukraine finalising e-government blockchain projects

FINTECH: Bitfury and Ukraine finalising e-government blockchain projects
The Bitfury Group CEO Valery Vavilov (left) with head of the State Agency for eGovernance of Ukraine Oleksandr Ryzhenko (right).
By Nicholas Watson in Prague May 23, 2017

Ukraine’s Euromaidan revolution in 2014 was a cry from the people to have a “government of the people, by the people, for the people”, so it’s fitting that this Eastern European country is about to become the first in the world to realise the full potential of blockchain technology to revolutionise the way that government works.

The Bitfury Group, a global company that is a leader in providing technological solutions based on blockchain, the underlying technology that powers cryptocurrencies like bitcoin, tells bne IntelliNews that it’s working with Ukraine on finalising the timeline for rolling out the first full-scale “Blockchain eGovernance program” – a memorandum for which was signed by the two sides on April 13 – which will look to put a sweeping range of government data and services on blockchain systems.

“We believe we have identified suitable pilot projects that will demonstrate the transformative power and unmatched security of our blockchain solutions, and we are looking forward to our partnership with the government of Ukraine,” Valery Vavilov, CEO and co-founder of Bitfury, tells bne IntelliNews.

The fundamental principles behind blockchain technology explain its attraction to countries like Ukraine that are looking to make government and the services it provides more transparent and secure. A blockchain is essentially a “distributed ledger” showing all the members of a particular network every transaction that was verified on it. The transactions are collected in blocks, which are then secured approximately every 10 minutes in a mathematical process called “mining”, and must be verified by other members in the network before they are confirmed. Given no central authority or potentially malicious third party can tamper with it, experts believe everything from land registries, to stock markets to financial services could use this technology to limit fraud and corruption, improve efficiency and maximize economic benefits to a broader section of society.

Vavilov says Bitfury and the Ukrainian government are looking at a number of areas and government services in which blockchain solutions could “enhance security and improve the lives of the people of Ukraine”, such as digital platforms like state registers, public services, social security, public health and energy. “Given our successful pilot program in the Republic of Georgia, where we successfully began the move to register land titles on the blockchain, we are considering that as well,” he adds.

Bitfury began working on a project with Georgia’s National Agency of Public Registry in 2016 to design and pilot a blockchain land titling project. Renowned Peruvian economist and president of the Institute of Liberty and Democracy (ILD) Hernando de Soto, who is advising on the project, has said that proper land titling on blockchains could help save globalisation by allowing much of humanity to participate effectively in their national economies.

Vavilov compares what these two former Soviet states are doing with blockchain to what many countries in emerging countries did in telecommunications. “By being among the first governments to embrace and implement this technology, countries like Ukraine and Georgia are positioning themselves to leapfrog other advanced nations, like many African nations did when they skipped broadband and moved directly to mobile digital,” he says. “By embracing blockchain technology, the governments of Ukraine and Georgia are making clear that they are ahead of the curve when it comes to meeting demand for governments that can be trusted to act in their best interest, addressing those concerns and building that trust.”

Vavilov praises the “smart, responsible leaders” in Ukraine, Georgia and other countries that his company is currently in talks with for looking at such technological methods like blockchain to ensure their country’s success “While we aren’t ready to name any specifically, I can say that Ukraine and Georgia are not alone in their desire to implement this technology to improve the lives of their citizens,” said Vavilov.

Such a dramatic and radical overhaul in the way that governments operate might be expected to take five, 10 years – Jamie Smith, Bitfury’s chief of global communications, says most early investors in the original internet predict that for blockchain we are in the equivalent of 1991-92, at the most – yet Bitfury stresses that one of the great misperceptions about blockchain technology is that it is enormously complicated. “In truth, it is actually quite simple,” says Vavilov.