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Ukraine Wants to Be the Crypto Capital of the World – The New York Times

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It has to be somewhere. Why not Ukraine?
In early September, Ukraine’s Parliament passed a law legalizing and regulating Bitcoin, step one in a campaign to mainstream the nation’s thriving trade in crypto and to rebrand the country.Credit…Brendan Hoffman for The New York Times
KYIV, Ukraine — A buccaneering 37-year-old educated in a British private school, Michael Chobanian is fluent both in English and the folkways of Ukraine, which he regards as a largely lawless frontier and which he likes to traverse in his black Ferrari 612. He is the founder of Kuna, one of Eastern Europe’s first cryptocurrency exchanges. To him, his native country is a terrific place to run a business, as long as you have the nerve to navigate a system rife with corruption.
Chief among the upsides, he explains in his office overlooking the Dnieper River, is the sort of freedom not seen in developed nations for hundreds of years.
Like, you can get away with murder.
“In this country, you can kill a person and you will not go to jail, if you have enough money and you’re connected,” he said, sipping tea on a plush leather sofa. “If you are not connected, it will cost you more.”
The anything-goes ethos has dogged Ukraine for years, and now the government is hoping to bury it, with an assist from cryptocurrency. In early September, the Parliament here passed a law legalizing and regulating Bitcoin, step one in an ambitious campaign to both mainstream the nation’s thriving trade in crypto and to rebrand the entire country.
“The big idea is to become one of the top jurisdictions in the world for crypto companies,” said Alexander Bornyakov, deputy minister at the two-year old Ministry of Digital Transformation. “We believe this is the new economy, this is the future and we believe this is something that is going to boost our economy.”
He has distilled the pitch into a 90-second infomercial that peddles Ukraine the same way that Apple peddles gadgets. Over a grinding techno soundtrack a montage of bakers, executives, nurses and assorted citizens are seen leading contented lives in a kind of high-tech nirvana.
“We invest in start-ups and create proper conditions for their growth,” a female narrator says in English. “Our goal is to build the most convenient country in the world, for people and business.”
Mr. Bornyakov has taken that message — Ukraine as the ultimate destination for entrepreneurs in search of low taxes, a minimum of paperwork and plenty of skilled engineers — on a road show, including a summer tour of Silicon Valley. The country’s president, Volodymyr Zelensky, met Apple’s chief executive, Tim Cook, as well as students at Stanford.
Plenty of economists and policymakers are deeply suspicious of crypto, decrying it as the currency of choice for money launderers, terrorists, mobsters and ransomware extortionists. But an international Crypto’s Got Talent contest is now underway, and many countries are competing. As entrepreneurs pour into the field, some governments have made a simple calculation.
If investors are going to pump money into these companies, then the companies should be enticed to relocate. And lately, investors have been pumping at a hectic pace. Funding of all blockchain-related tech — cryptocurrencies, gaming, infrastructure, NFTs — soared to $7 billion in the first half of this year, according to CB Insights, a firm that tracks the industry.
So Poland is offering tax breaks and financial support to beckon tech professionals, even poaching in Ukraine. (A counteroffensive is in the works, says Mr. Bornyakov.) Lithuania, Estonia, Malta, Mexico, Thailand and Vietnam are in the race, too.
For Ukraine, the point isn’t merely new jobs and added tax revenue. Tainted for decades by financial scandals and buffeted by the infighting of oligarchs, Ukraine today is the second poorest nation in Europe. By tacking hard into a digitally dominant financial system and culture — online passports have already been rolled out — Ukraine’s leaders hope for a massive reset, one that will rewrite the long-running narrative about chaos and crookedness that has shadowed the country since its independence in 1991.
The problem is that many tech entrepreneurs here say they like the system just the way it is, and they are especially fond of its flaws. Which gets to the paradox at the heart of Ukraine’s attempt at reinvention. The country is pushing sunlight and legitimacy to a group of executives who often prefer darkness and quasi-outlaw status.
Ukraine has already lured some Americans and Brits in the crypto industry, and they didn’t come because they’re sticklers about the rule of law. Instead, they rhapsodize about everything from affordable restaurants to unhinged raves. Better yet, the government has not a clue about what they are doing or how much they earn.
“There are no rules,” says Mr. Chobanian, with an odd kind of civic pride. “Well, there are rules, but you can break them. It’s the perfect balance between absolute anarchy and possibilities.”
Ukrainians are among the most avid cryptocurrency users in the world, ranking fourth in the Global Crypto Adoption Index compiled by Chainalysis, a data firm. Roughly $8 billion worth of it now enters and exits the country annually, and the volume of cryptocurrency transactions each day, about $150 million, exceeds the volume of interbank exchanges in fiat currency.
This isn’t about crypto-fever so much as a lack of better options. Banks in Ukraine are so sclerotic that sending or receiving even small amounts of money from another country requires an exasperating obstacle course of paperwork.
Equally bad, inflation has nibbled away at the hryvnia, the national currency. Ukraine doesn’t have much of a stock market, and foreign ones are essentially out of reach. For those who want their savings to appreciate, that leaves real estate and crypto. The latter is often spectacularly volatile; Bitcoin lost half its value between April and July of this year, then recouped its losses and set a record high in October. But it’s more liquid than, say, an apartment, and frictionless compared to the fiat system.
“The banks,” said Mr. Chobanian, “have been very good at creating demand for my services.”
Kuna now handles about $3 million a day in transactions, a pittance compared to Goliaths like Binance, but enough to land the company on a recent Forbes list of Ukraine’s most valuable companies. It took years to achieve this level of popularity. The first time Mr. Chobanian sold crypto, he said, it felt like a drug deal.
It was March 2014, the month he’d launched Kuna, named for an animal skin that long ago was used as currency. It was a three-man company at the time and little more than a website with a phone number and a posted exchange rate. Mr. Chobanian had staked Kuna with about 50 Bitcoins, which he’d acquired after studying the banking and payments industry in 2011 and concluding that crypto could change the world.
A customer called who wanted about $100 worth of Bitcoin. The two met on the street in the center of Kyiv. The guy handed over cash; Mr. Chobanian wired Bitcoin through his mobile phone.
“I was petrified,” he recalls. “I thought I’d be arrested immediately.”
It took a little longer. The police showed up at his apartment in November 2015, in a then-common attempt at a shakedown. Kuna at the time conducted all of its business online and had become the exchange of choice for a growing number of crypto fans. Five police officers spent hours searching Mr. Chobanian’s apartment and confiscated his mobile phones, computers, even his wifi routers.
“They assumed I had cash, too,” said Mr. Chobanian. He didn’t. He knew he was supposed to show up at the police station and buy back his equipment. Instead, he wrote an impassioned essay on his lawyer’s computer, posted on Facebook, describing the ordeal.
“I woke up the next morning a superstar,” he says. “I was on five or six talk shows, including the top-rated political show in the country.”
Penny ante corruption, like traffic cop bribes, have all but vanished, and since 2012 the country has improved its results in Transparency International’s corruption perceptions index. A free-for-all mentality, on the other hand, endures. Ukraine is cracking down on fake Covid-19 vaccination certificates and nobody seems very bothered that the mayor of Kyiv, the former heavyweight boxing champion Vitali Klitschko, lives above a strip club known as a place to meet prostitutes. (Whether the mayor owns Rio, as the club is called, is unclear. Though it does seem to operate under its own rules; a group of entrepreneurs singled out Mr. Klitschko in an April protest in front of City Hall, complaining that Rio was open during the pandemic while other businesses were forced to close.)
During a walking tour of Kyiv, Mr. Chobanian talked about politicians on the take and construction projects that audacious developers just started building, skirting zoning laws and licenses. He related these facts with a rueful sense that something was terribly broken about Ukraine. That said, those defects allow him to run his company with no oversight. What makes this country ideal for Kuna — a weak government, a dearth of guardrails — is a national tragedy for the wider population.
For now, the government knows nothing about the size, revenue or structure of his company, including staffing figures. When a woman brings him tea during our interview, he describes her as an “entrepreneur,” which, he explains, is why he doesn’t pay her a salary.
“Right now, there is no government in my business,” he said. “None.”
Ukraine has suffered through too many financial scandals to expect a major influx of executives from large, international investment banks, with or without inducements. But then along came crypto, which has reputational woes of its own. Maybe this is a perfect match.
That wasn’t how Mr. Bornyakov described the upsides of crypto during a pivotal meeting earlier this year with Mr. Zelensky, the former television comedian who was elected president in 2019 and is perhaps best known as the guy on the phone with former President Donald J. Trump in a conversation that led to the first Trump impeachment. Mr. Bornyakov emphasized opportunities, in terms of jobs and economic growth, as well as the downsides of inaction.
“There’s a shadow economy here,” Mr. Bornyakov said in an interview, “and if we don’t do anything about it, there’ll be more and more, and we don’t know how it will end.”
He was speaking in a deluxe communal office space in a stylish corner of the city. Creative States is billed by its owner as a “five-star hotel for businesses,” and the ground floor has a cafe with Art Deco touches and plenty of furniture in taupe upholstery, including a sofa with throw pillows that each feature a photograph of the cast of “Friends.” The place is home to three floors of new companies.
There’s room for Mr. Bornyakov at the ministry’s drab Soviet-era headquarters, but planting himself at a hip entrepreneurial hub underscores that his mission is a radical departure from government as usual. And he’s just getting started.
“We’re going to create sort of digital embassies around the world,” he said, “staffed with what we call digital ambassadors.”
The goal is to double the percent that tech adds to the gross domestic product, from five percent to 10 percent, and double the number of people in the tech industry, to about 500,000. By 2025, when the World Bank forecasts Ukraine’s G.D.P. will be $180 billion, tech should contribute $18 billion to that figure.
What about the corruption that has plagued this country and might daunt would-be émigrés? Future administrations might not allow tech companies to flourish without raids and seizures. Russia threatens from the east. There are also revolutions to worry about. There have been two since 2004.
Even without another revolution, Steven Hanke, a professor of applied economics at Johns Hopkins University and a vocal Bitcoin skeptic, argues that the combination of Ukraine and crypto sounds like a fiasco in the making. Most studies he’s seen have found that roughly half of all Bitcoin transactions are for some illegal purpose. To him, this is not an industry that Kyiv should target with enticements.
“The country has endemic corruption and criminal syndicates swarming all over it,” he said. “Ukraine will appeal to shady characters because shady characters like to penetrate countries like Ukraine.”
Mr. Bornyakov disagrees, though he offers a peculiar form of reassurance. No matter who is in charge, he argues, foreigners will have a kind of built-in protection, simply because they are foreigners.
“You can go to Egypt, which I know there’s a lot of problems, too,” he said. “But if you’re a tourist nobody is going to harm you, nobody is going to touch you because on some DNA level people there know that tourists bring them money. We want to kind of create a similar situation here.”
As Mr. Chobanian proved after the police searched his home, the primary assets of a tech company can’t be confiscated the same way that a malign player could take over, say, a power plant or a nickel mine. It would be a challenge to appropriate a knowledge company like Kyiv-based Hacken, for instance, a cybersecurity firm that specializes in blockchain work. Its value resides in a cadre of white-hat hackers who are spread around the world.
Its co-founder, Evgenia Broshevan, sat in a conference room in Creative States and mused about how she ended up a leader in such a male-dominated industry. All credit to her grandmother, she said, a mathematics teacher who also seems to have gifted her a knack for practical thinking that is clearly a requirement in Ukraine.
“Anyway,” she said, discussing the possible risks to the company, “you need to have lawyers.”
The 11 Mirrors Rooftop Restaurant has a $180 rib eye on the menu, signed photos of celebrities on a wall and a panoramic view of downtown Kyiv. It feels like a steakhouse that has been airlifted from a Las Vegas casino, and it’s owned by the mayor’s brother, fellow heavyweight phenomenon Wladimir Klitschko. The location is ideal for carousers. Rio, the strip club, is a few paces down the street.
Sitting at a small round table one recent evening are two members of the international crypto talent pool. Hartej Sawhney, who grew up in Princeton, N.J., is co-founder of Zokyo, a crypto auditing firm, which evaluates the security of tokens and smart contracts. Shadi Paterson is a Brit who runs a company that recruits employees for crypto companies. He’s wearing a T-shirt that reads “Take Your Pills.”
Both men are residents here and both radiate the sense that they have found the right place and the right sector at precisely the right moment.
“Today we have multiple opportunities to 100 X your money in crypto,” Mr. Sawhney said. “At its peak the internet was growing, in terms of users, at 63 percent, year over year. Crypto, since its inception, has been growing at 137 percent.”
Like many foreign crypto entrepreneurs who live here, the two men describe the country as a kind of utopia of the senses. Everything from food to chauffeurs is one-fourth the price of Manhattan. Ketamine and MDMA are plentiful at the raves. Plus, the dating scene — by their account, anyway — sounds modeled on a season of “The Bachelor.”
“They’re actually competing to try to impress you,” Mr. Sawhney said of his experience with Ukrainian women. “It’s happened dozens of times here, where instead of me hitting on a woman, the woman is hitting on me — a woman I think is out of my league.”
The two men are a little reluctant to praise Ukraine too publicly. The country has so much to recommend it that they worry that if the secret of its charms is widely known, more people will move here, which could erode the advantages of life as a foreigner.
They are also of two minds about the new crypto law. They grasp the potential benefits of the legitimacy that comes with a government imprimatur. They also like running companies that sweat no regulations and pay no Ukrainian taxes. As for the country’s tenuous relationship to scruples, that is a selling point.
“I like that it’s corrupt here,” says Mr. Sawhney. “Here, we get to play the game that only elites in the U.S. play. I don’t need a lobbyist. I need to pay someone at the border, I can. I need to pay politicians, I can.”
Mr. Sawhney prefers that his business remains not merely under the radar but off it entirely. Mr. Paterson understood the impulse. But he said that he’d either have to pay a percentage to gangsters to launder his money or a percentage “to the other gangsters,” namely, the Ukrainian government, which would transform his crypto savings into a fully protected stash.
In its future road shows, the Ministry of Digital Transformation will surely phrase it differently, but Mr. Paterson had gotten the gist of the government’s message.
“I can legalize all my money and there’s nothing any country can say about it?” he said, as though describing a dream. “I can send it anywhere? I can buy a house with it? That, to crypto people, is pretty crazy.”

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Cryptocurrency prices today under pressure: Bitcoin falls 3%, ether 6%; Uniswap gains | Mint – Mint

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  • The global cryptocurrency market cap today remained below the $1 trillion mark

Cryptocurrency prices today came under pressure after the US Federal Reserve delivered another big interest-rate hike and warned of economic pain from the aggressive policy tightening still to come. The Fed’s determination to raise rates to levels that hammer inflation at the cost of sliding asset prices sent a chill across global markets.
Bitcoin, the world’s largest and most popular cryptocurrency, was trading more than 2% lower at $18,627, came close to dropping below $18,000 level. The global crypto market cap today remained below the $1 trillion mark, as it was down over 2% in the last 24 hours at $943 billion, as per CoinGecko. On the other hand, Ether, the coin linked to the ethereum blockchain and the second largest cryptocurrency, continued to underperform and fell more than 6% at $1,260.
“Bitcoin, Ethereum, and most cryptocurrencies traded lower on late Wednesday after the Federal Reserve raised interest rates by 75 basis points marking the third consecutive time this year. BTC continues to struggle below the $19,000 since bears are more powerful than bulls in the market. The second largest crypto, Ethereum was seen changing hands above the $1,200 level. The price of ETH has been dipping since the Merge took place as miners continued to dump their ETH in the market coupled with macroeconomic factors. If the selling pressure from miners increases, ETH is likely to fall below the $1,000 level,” said Edul Patel, CEO and Co-founder of Mudrex.
Meanwhile, dogecoin price today was also trading about 3% lower at $0.05 whereas Shiba Inu slipped more than a per cent to $0.000011. Other crypto prices’ today performance also declined as XRP, Stellar, Solana, Polygon, Avalanche, Binance USD, Polkadot, Litecoin, Apecoin, Cardano, Chainlink, Tron, Tether prices were trading with cuts over the last 24 hours, whereas Uniswap gained.
Such a backdrop offers little respite for crypto markets. They were already reeling from a $2 trillion plunge from a 2021 record high, an unraveling pockmarked with blowups such as the Three Arrows Capital hedge fund and the Terraform Labs project — whose co-founder Do Kwon is wanted by authorities.
(With inputs from agencies)
 
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Bitcoin's Accumulated Momentum Is Going To Be Hard To Stop – Bitcoin Magazine

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While "the smartest people in the room" scan the horizon, bitcoiners are out there actually building the future they want to live in.
The below is a direct excerpt of Marty's Bent Issue #1259: "Bitcoin is action. The accumulated momentum is going to be hard to stop." Sign up for the newsletter here.
This morning I listened to a recent Macro Voices podcast with Brent Johnson from Santiago Capital. It was a very good conversation about the state of the global economy, particularly focused on the dollar's relative strength against other currencies and how things may play out as the dollar continues to strengthen as prophesied by the "Dollar Milkshake" theory. Here's a link to the episode for those interested.
Toward the end of their discussion Erik (the host) and Brent make it clear without saying anything explicitly that it is insane that global markets are essentially beholden to the whims of a very select few people, central bankers, out of the billions who are alive on this planet. The fact that the world hinges on the cryptic language of people who are completely disconnected from reality and do not suffer the consequences of their actions is a bit baffling. With that being said, what I'd like to focus on is the fact the Erik and Brent ended their conversation with a brief detour to discuss the next world reserve currency. Both gentlemen acknowledged that it would likely be a cryptocurrency – likely produced by one of the governments or a coalition of governments – and will certainly not be bitcoin.
To your Uncle Marty, this is an incredibly hilarious line of thinking from a couple of individuals who seem to "get it" in regards to the fact that the fiat system is doomed for failure and it's failure is being driven by incompetent central planners. To think that the solution to bad central planning from an incompetent group will be better central planning from the same group via a fresh slate a CBDC or something like it would provide. Even funnier is the fact that they emphatically proclaim that bitcoin most certainly will not become the dominant money in the world while deriding "bitcoin maximalists". This is our edge, freaks.
While "the smartest people in the room" scan the horizon waiting to place their bets on something that hasn't materialized yet and is sure to end in failure if it ever does because it will suffer from the same centralized attributes that doomed the dollar, bitcoiners are out there actually building the future they want to live in. The macro mensches of the world can continue to sit on the sideline and pontificate about what they think will come to market. Bitcoiners will continue to act and bring their distributed, censorship resistant, sound money to market. And the headstart bitcoin has amassed is approaching insurmountable. It is a step-function improvement on the incumbent monetary system in every way.
It's provably scarce and extremely hard to change.
You can send it over the internet.
You can divide more granularly.
It is extremely hard to prevent someone from receiving or sending bitcoin if used correctly.
And, what might be the most underappreciated aspect, it is beginning to become an integral part of the energy sector. And as we're finding out now energy is pretty damn important. Arguably the most important asset on the planet. Bitcoin becoming an essential for energy producers makes it significantly harder to kill from a logistical and political perspective.
We are so early.

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Boba Network Partners With Avalanche, Boba AVAX L2 to Provide 'Faster Transactions and Lower Fees' – Blockchain Bitcoin News – Bitcoin News

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by Jamie Redman
On Wednesday, the layer two scaling solution that leverages optimistic rollup technology, Boba Network has revealed it now supports the proof-of-stake (PoS) network Avalanche. According to the Boba Network team, the new Avalanche support will produce “faster transactions and lower fees.”
Boba Network, the layer two (L2) scaling project introduced Boba AVAX L2 on Wednesday via the team’s Twitter account. “We’re over the slopes to announce our partnership as an official scaling solution for Avalanche,” Boba said. “Avalanche offers blazing fast speeds, low costs, and eco-friendly solutions: Boba AVAX L2 holds true to those values and enhances it further.”
Boba is already connected with the Ethereum (ETH) network and at the time of writing, l2fees.info stats show Boba’s fee to move ether today is $0.17, and to swap tokens the estimated price is $0.30. That is cheaper than the current 34 gwei ($0.96) to send ether onchain, according to etherscan.io’s gas tracking tool. A high-priority decentralized exchange (dex) swap can cost $8.47 per transaction onchain, so Boba’s $0.30 cost to swap, is 96.45% cheaper.
“Faster transactions, lower fees: Boba AVAX L2 is catered for all heavy transactions, throughput-reliant protocols [and] anyone wanting to be part of the next generation,” Boba further declared on Wednesday. The team further explained it is joining partner decentralized applications (dapps) like Sushiswap and Evoverses with the new support. Boba added:
While Sushi will be deploying their Legacy Swap on Boba AVAX L2, Evoverses’ will be joining with their 3D PvP gameplay, powered by the Unreal Engine 5 [and] Hybrid Compute to help the game scale and reach its full potential.
L2 projects like Boba Network have been partnering with a great deal of industry heavyweights and blockchain networks in recent times. Opensea recently detailed the leading NFT marketplace has added Arbitrum support and the NFT market competitor Rarible revealed Immutable X support. Arbitrum, Immutable X, and Boba Network are all L2 projects and other competitors include Loopring, Zksync, Optimism, Metis, Polygon Hermez, and Aztec.
What do you think about Boba Network adding Avalanche support? Let us know what you think about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
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