Pavel Kravchenko, Education & Cryptography Advisor at Ukrainian blockchain laboratory Distributed Lab, thinks that selling state property via blockchain technology will bring drastic changes to the country.
The cryptocurrency specialist shared his opinion in an interview to International Business Times. Foreign investors demand the authorities to fight corruption in the country, and now Ukraine can present this event as an evidence that such fight is going on, he said.
It will be possible to exclude any corruption schemes at the auction due to the high level of control that blockchain provides. Kravchenko sounds rather sceptical about the ability of the state to deal with corruption issues on its own, using traditional methods: “Everybody knows that the state doesn't run things efficiently,” said the expert.
Launching the auction required integration of blockchain into the banking system. It was necessary to bring fiat money via blockchain to bank accounts, transactions being then confirmed by a signed receipt. This became possible by creating a special API. Quite a complicated task of integration was done in only two days, noted Kravchenko.
Technically, corruption schemes are eliminated with the help of a Proof of Stake protocol. Money is transferred via various trading platforms. The algorithm provides that the more money goes through a platform, the more users start using it. With blockchain keeping a record of every transaction, the process remains transparent. As a result, everybody knows whether this or that platform is reliable.
“If some trading platform is corrupted (for example, sells property cheaper to specific users while rejecting higher bids from regular users) then users will move to another trading platform and therefore increase its stake size.”
Using blockchain also helps with KYC because the information in the blockchain is unchangeable. The next step, notes Kravchenko, will be creating semi-anonymous auctions, where a user will be able to prove that they have paid the money without disclosing their identity.
The blockchain platform which this auction works on was developed using modules of Distributed Lab’s INFRA system. The project is driven by the Innovation and Development Foundation, a Ukrainian non-governmental organisation that works as an integrator and deals with issues from various fields, including the reforms of the public sector in countries with developing democracies and transition economies.