Ukraine and BitFury launching first ‘full-scale’ blockchain eGovernment pilot

The State Agency for eGovernment in Ukraine and Bitcoin mining manufacturer BitFury recently announced a memorandum of interaction and cooperation to create “the first full-scale Blockchain eGovernance program for Ukraine."

According to the announcement, the program will begin with a pilot project introducing Blockchain technology into Ukraine’s eGovernment platform. The pilot will primarily focus on using blockchain technology in state land registries, public services, social security, public health and the energy sector. When the pilot is complete, the program will expand into all other areas, including cybersecurity.

The pilot is expected to launch later this year, and although the size and cost of the project have yet to be determined, BitFury CEO Valery Vavilov told Reuters that it is “by far the biggest government blockchain deal ever.”

“Blockchain has proved itself as a good ground for cost reduction, government efficiency & transparency to help reduce corruption. All these are among our goals. So we’re ready to bring blockchain as part of Ukrainian eGoverment strategy.”
— – Oleksandr Ryzhenko, head of the State Agency for eGovernance of Ukraine

The memorandum was signed in Kyiv by Vavilov and Oleksandr Ryzhenko, the head of the eGovernance of Ukraine. The State Agency for eGovernance is the central executive body within Ukrainian Government that determines state policy in the field.

Ukraine has a population of 42.5 million, and is the largest country by land mass wholly within Europe. Although the country is not a part of the European Union, it is a member of the EU’s Deep and Comprehensive Free Trade Area (DCFTA), along with the nearby Republic of Georgia.

According to latest eGovernment Development Index (EGDI) from 2016, Ukraine ranks 62nd among 193 countries in terms of eGovernment progress, and has climbed by 25 points since 2014. "Our aim is clear and ambitious — we want to make Ukraine one of the world’s leading blockchain nations," Ryzhenko told Reuters. "This agreement will result in an entirely new ecosystem for state projects based on blockchain technology in Ukraine."

Last summer the Ukrainian Prime Minister announced that his government would be deploying a blockchain to track the sale of state assets through, which was typically a fraud-prone exercise rife with corruption. A few months later, the country’s central bank informally announced plans to create their own blockchain-based currency.

“This technology will help eliminate corruption in government sales, as well as save taxpayers billions of hryvnia. That’s my main goal.”
— – Oleksandr Danilyuk, Ukraine Finance Minister

The BitFury Group began in 2012 as a Bitcoin mining hardware manufacturer and is still the world’s second-largest maker of Bitcoin mining equipment. The American-based company has seven offices in six different countries, and has become a full-service Blockchain technology company that develops and delivers both software and hardware solutions.

The company states that Blockchain technology will help improve the protection of state databases against unauthorized interference, reduce cost to citizens, improve overall efficiency, improve investment in Ukraine, and help reduce corruption across the board.

The Ukrainian eGovernance pilot is BitFury’s second government blockchain project. Last April, BitFury signed an agreement with the Republic of Georgia to launch the first blockchain-based land title registry, which has since been expanded.

Both Ukraine and Georgia border the Black Sea, where several countries in the region have seen advanced Bitcoin adoption, thanks in part to BitFury. The company announced a shift from primarily being a mining equipment manufacturer to a full-service Blockchain technology provider last year, as it partnered with big-four accounting firm EY as their primary blockchain service provider.

"A secure government system built on the blockchain can secure billions of dollars in assets and make a significant social and economic impact globally by addressing the need for transparency and accountability."

• Valery Vavilov, The BitFury Group CEO

With Georgia’s pilot long finished, today BitFury’s custom-designed Blockchain system is integrated into the country’s national digital records system. Their private, permissioned Blockchain is anchored to the Bitcoin Blockchain, using a distributed digital timestamping service that they designed.

BitFury also hosts several carbon-neutral mining plants in the nearby Republic of Georgia, and worked with the government to launch their blockchain-based land registry.  “This data center will take immersion cooling technology to the next level and set a new standard for data processing using renewable energy,” Vavilov explained. “BitFury is leading the innovation in this space and we are proud to unveil our new data center and to work with our global partners to advance this important work."

While there are a handful of other countries that have launched their own eGovernance programs involving a blockchain, they are all limited to one or two sectors, such as land titles registries. The governments of Sweden, Estonia, and Georgia have started blockchain projects, although other deals in Brazil and the Ukraine are in the works.

“Our partnership with the Ukrainian government is about making the lives of the Ukrainian people better by making systems work for people and reducing friction across the board for all […] The Blockchain is a transformational technology that is easy to use, inexpensive, and much more secure than current systems. We will help ensure everyone can effectively and easily exchange value and ownership in a way they can trust.”
— – Valery Vavilov, The BitFury Group CEO