Rumors are beginning to surface that Ukraine is working toward adopting Bitcoin as legal tender. President Volodymyr Zelensky or representatives from his nation have met with officials in El Salvador to discuss such implementations. El Salvador was the first country to adopt Bitcoin as legal tender and President Nayib Bukele has been at the forefront of nation-state discussions on Bitcoin as legal tender.
Earlier this week Ukraine legalized Bitcoin and gave some clarification to its status in the country. Previously there was no guidance as to whether it was legal to own, use, or invest in cryptocurrencies. You can read more on that event here.
President Zelensky has been a proponent of Bitcoin and has attempted to persuade the government to create a crypto-friendly environment in which it can flourish.
According to the article by Darren Parkin at CityAM,
“The plan, says Professor Vyacheslav Evgenyev, is for Ukraine to make Bitcoin legal tender by the start of 2023 and create a “duel-currency country” where Bitcoin sits alongside the fiat hryvnia before potentially being phased in as the dominant financial structure.”
Professor Evgenyev continues,
“You need to look at the dynamic of Ukraine to understand how and why its government’s plan to restructure towards a digital economy could actually be a real stroke of genius,” Prof Evgenyev explained.”
“It has a young population eager to move out of the shadow of its noisy neighbor and shake off the financial chains which have restrained it for so many years.
“Russia’s overbearing influence in the concerns of Ukraine could prove to be the fuel to it needed for the engines of success.”
Bitcoin, he believes, may just be the magic potion required to wake a sleeping giant.
“The prospects here are enormous,” the professor adds.
Although the information is pretty fresh it still looks like this might be a few years out. According to the article, the plan is to have a “dual currency” nation that includes both the fiat hryvnia and Bitcoin as legal tender by the start of 2023. It will be interesting to see how this plays out. How will this experiment of a fiat currency alongside sound money even work? I would suspect based on the history of money that in the end the soundest money will win out and make the hryvnia irrelevant.
Also, another test will be the adoption of Bitcoin as legal tender in a much larger and more developed nation:
- Ukraine has a population of 43 million while El Salvador’s is only 6 million.
- GDP of Ukraine was $155 billion as compared to El Salvador’s $24 billion.
Therefore, finding a useful and efficient way to transition to a “dual currency” is a much larger task at this point. And how this plays out in El Salvador and in Ukraine will have lasting effects on adoption around the world. Maybe this is a glimpse of how Bitcoin revolutionizes money in a more peaceful and promising way rather than by force as happens with fiat. Only Bitcoin time will tell.