Interviews

Sukhum. 25 October. Apsnypress. Damey Kaslandziya. The formation of a full-fledged digital economy in the country with the use of crypto currency and blocking technology will give new huge opportunities to attract investments to Abkhazia. This opinion was expressed by Minister of Economy Adgur Ardzinba in an interview with Apsnypress.

  According to experts, Abkhazia can become the main platform for the development of crypto-currencies. Since the work of the so-called "crypto-farms" and "mining hotels" requires a lot of electricity, the price for which is low in our country. What is the probability that such farms or hotels will soon appear in Abkhazia?

 Not certainly in that way. In fact, in terms of price, and most importantly, quality, Abkhazia in many respects loses to other players of this market. For example, in the Russian Federation there is a number of regions with isolated power systems where more electricity is produced than consumed, in particular, in the Far East. If we talk about foreign countries, then in this sense, we can select countries such as China and Iceland. By the way, neighboring Georgia has been showing considerable activity in this direction for a long time already and already enters into the circle of the leading countries of the world of crypto-currency ( means the extraction of virtual coins with the help of special devices, and accordingly, the diggers of digital currencies are called miners ).

 In our case, mining itself can be viewed as a platform for attracting investments in the country's energy system, using public-private partnership mechanisms, in accordance with the RA Law on Investment Activities. Indeed, there is a very high potential for the development of hydropower in Abkhazia - one of the cheapest types of power generation in terms of production costs.

Adgur Amiranovich, let's clarify the terms. What is the current popularity of crypto currency?

The crypto currency itself is a digital currency, the issue and control of which are based on cryptographic methods. Accounting and functioning of Crypto-currency are decentralized and are based on blocking technology ( blockchain - means "chain of blocks." A block is an information package containing all the previous information and some of the new ones. A distributed database between multiple participants, operating without centralized management ). In fact, the key element of these technologies is cryptography or encryption, which allows providing a high level of security and reliability. To date, the crypto currency can not be called "money" in the full sense of the word, since it is not recognized as a legal means of payment in most countries or is recognized, but in a narrow, inferior format. At the same time, the crypto currency meets all the criteria of a universal payment facility and can be viewed as a modern analog of classic fiat money ( legal means of payment in a particular country ), but with more advanced characteristics and original functioning principles.

 To date, there is already a large number of varieties of crypto currency. The most interesting are those that are in the top ten by capitalization and, therefore, are the most popular and promising. These are Bitcoin, Etherium, Ripple, Bitcoin Cash, Lightcoin, Dash and others. The volume of the world market of crypto-currencies is approaching 200 billion US dollars, according to some estimates and taking into account the growth dynamics in the next decade it will reach 2 trillion USD. 

The dynamics are impressive. So, soon the crypto currency will be able to displace the money we are accustomed to?

 If we talk about the prospect of a full-scale introduction and legalization of the turnover of crypto-currencies around the world, in my opinion, this is just a matter of time. For example, in countries such as Switzerland, Japan, Singapore, the circulation of crypto-currency is allowed in one form or another. The corresponding financial infrastructure has been created: crypto-exchange exchanges, exchangers, etc. I know that Russia is also very tight in this direction.
  
 In any case, I think everyone was already well aware that it is impossible to stop this process and there is no sense to spend energy on blocking new technologies. On the contrary, those countries that before others will be able to create the most comfortable environment for the circulation of crypto-currencies and the use of block-building technologies, will be able to advance noticeably. I very much hope that Abkhazia will be among these countries, in any case, we are now very diligently engaged in studying and preparing the relevant project solutions.
  
  What are the advantages and disadvantages of this type of currency?
  
 Speaking of shortcomings or advantages, it is necessary to build on the position of the state in which you are. As I have already said, blockade technologies are decentralized and are in no way regulated by international financial institutions, such as the World Bank or the International Monetary Fund. If you represent the US government or China, where foreign investment is tightly regulated, there is certainly no way to control and regulate cash flows for you minus. And if you, for example, represent the government of Abkhazia, these qualities of the crypto-currency market are an absolute plus for you, as it allows you to attract investments from anywhere in the world without any restrictions.

How can a massive shift to crypto-currencies affect the economy as a whole, and will it give an impetus to the development of the Abkhaz economy?
  
 As I have already said, a massive transition to crypto currency is inevitable. In the coming decades, this market will absorb an increasing part of the world economy. Banks and financial regulators in the classical sense of today will disappear. This will lead to a global reduction in costs, mainly related to securing transactions and other banking transactions. Of course, there will remain those who will resist these processes to the very end, which certainly will bring these countries or regions into the world of outsiders.
  
 As an example you can bring the Internet. Despite the fact that almost half a century has passed since the creation of the global network, there are countries in which the connection to the network is still possible only with the official permission of the authorities. This is nothing more than an anachronism, in my opinion.
  
 Of course, this does not mean you need to make ill-conceived steps without looking at the potential risks. It is necessary to be weighed as much as possible, but at the same time, without wasting time, to approach the issues on the introduction of these technologies into practice. Fortunately, there is already a successful world experience, which can be guided without repeating other people's mistakes.
  
 This is certainly a great chance for the development of the Abkhaz economy, which can fall once in a hundred years, and our future depends on how effectively we will be able to take advantage of this opportunity. First of all, it is a great opportunity to attract investments, make the state management system as transparent and effective as possible. And also, which is important, if we are among the pioneers in the introduction and use of blocking technologies, we will be able to break through the information blockade. Abkhazia will be known all over the world and the most progressive part of mankind, which is today at the forefront of new technologies, will be informed about us, about our history, about our small country. This can be a breakthrough in many directions at once.

Now many people have begun to buy out the crypto currency and, so to speak, fill their electronic pockets, is it worth it to store this kind of currency for us?

 In this issue, it is necessary to take into account that any investment, including crypto-currencies, should be based on the understanding of the market, a detailed study of the factors that influence pricing. The market of crypto-currency is very volatile (volatility - a financial indicator characterizing the volatility of the price), fluctuations of a few tens of percent per day is the norm here. Therefore, those who want to invest in crypto-currencies, in my opinion, need to focus on long-term investments, although a short margin can not exclude high margin. For example, the growth of Bitcoin rate from 2014 was more than 1000%. 
 There can not be universal councils here, but at least before taking any steps in this direction, it is necessary to collect as much information as possible on the crypto-currency market in general, and on the most promising crypto-currencies with a large growth potential, separately. 
  
  Is it possible to create our own crypto currency in Abkhazia?
  
 Yes, it is possible. We in the Ministry of Economics with the involvement of foreign specialists have been working on this issue for more than seven months. Before talking about creating our own crypto currency, we thoroughly studied international experience and practice, analyzed all factors, including potential risks. Given the absence of Abkhazia's emission of the national currency and the financial system in the classical sense, the risks for us are relatively minimal. At the same time, the potential and opportunities that are opening up before us are incommensurably higher than the possible risks. Mostly, we are talking about attracting investments through ICO ( red. - ICO, English Initial coin offering, a "primary offer of coins" - a form of attracting investments in the form of selling to investors a fixed number of new units of crypto currency , obtained by a single or accelerated emission ). Then, in fact, Abkhazia can become one of the first to enter the ICO at the state level. The advantages of this market are that citizens of the whole world can invest in our economy without fear of sanctions or other ridiculous restrictions that apply to us from the world community.

 As the ultimate goal of the reforms in this area, we are considering a scenario for the formation in our country of a full-fledged digital economy based not only on the use of crypto-currency and financial-block technology in the financial sphere, but also in public administration, education, medicine and other spheres of the state's life.