PrivatBank: Blockchain is Great, but We Put Our Stake on Bitcoin

News and Analysis
25.12.2015

Dmitri Donets, deputy chairman of e-business center at PrivatBank presented an extended speech on the bank’s cryptocurrency-related intents at Blockchain Conference Kyiv.

Last week PrivatBank became the first Ukrainian bank to integrate bitcoin as a settlement tool. As of December 14, it has been available to several customers of the bank, while as of December 20 any entrepreneur has had an option of accepting bitcoins for goods and services.

Unfortunately, merchants cannot accept bitcoins directly. As the customer sends his or her bitcoins to the bank, the merchant receives a hryvnia-equivalent of the amount. This limitation is related to lack of legal certainty for bitcoin in Ukraine. However, the National Bank of Ukraine stated that it was going to integrate bitcoin in the country’s financial system. This means that immediate acceptance of bitcoins in Ukraine is but a matter of time.
ForkLog talked with Mr. Donets at the conference.

FL: What do you think about bitcoin integration in Ukraine? What do you expect from the regulator? Does the bank have some plans concerning blockchain?
DD: I’ve already told that while creating the apps we almost completely avoided the blockchain technology. Blockchain is a great technology, but we put our stake on bitcoin in the first place. All our apps are cryptocurrency-centric. As for the regulator, we watch them with a cautious optimism. We realize that there are no miracles, and there’s a lot of work to do in that direction. Traditional banking structures are burdened with certain procedures aimed at AML measures, counter-terrorism, and so on. We will have to take that into account during our experiments. The project’s success will also depend on how effectively we will demonstrate safety of our tools to the regulator. So, everything is just beginning. However, there are some positive results from our work with the National Bank. They are positive about our activity, they ask fair questions, and make fair warnings. I believe we will succeed.

FL: Currently PrivatBank works under the scheme “accept bitcoin and give hryvnia”. Do you have plans of integrating crytocurrency as a direct payment mechanism in the future?
DD: We really wish it was so. Objectively speaking, nobody’s interested in being an intermediary. But it’s a matter of time. I’m afraid, that it is impossible in the short run. For starters, we will have to work good in the short term to have, if I may say so, a required score. If we do everything right and present the regulator with a positive transaction experience, there will be no problems. We will show average transaction amount, direction of flow of funds, and all mechanisms we employed to hinder misuse to the regulator.

FL: For how long PrivatBank was studying Bitcoin before proceeding with the actual work?
DD: We’ve been watching closely on bitcoin since 2009. About 18 months ago we hired the first experts to study cryptocurrency.

FL: Corezoid platform is also an interesting. It is affiliated with PrivateBank. Does it work with bockchain, or it is more of a cloud service?
DD: The platform is a cloud service connecting any units via its API. Even if there is a blockchain, it still will be connected via API. Generally speaking, it was not its purpose. However, it’s also applicable in the area you mentioned. If there’s a necessity, it will be possible. The system starts living its own life, so I assume there might be some experiments in this regard. We just don’t know a thing about them. We opened the data, stated the rules, and taught some people at conferences and demonstrations. People started mastering the system in their own way for their individual business objectives and plans. Certainly, we expect someone to come up with something related both to the blockchain and Corezoid.

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