Bitfury's Mission: Interview With Alexander Botezatu
Nowadays Bitfury is one of the largest industrial miners and developers of both the software and hardware for the blockchain technologies. The company was established in 2011 by Valery Vavilov. Since then Bitfury has become one of the world leaders in its sphere.
The Head in Bitfury Software, Alexander Botezatu told us about cooperation with the Ukrainian government in case of implementation blockchain into official processes, and also explained the features of the three main Bitfury products.
You have recently opened a new office in Norway. Why did you choose Norway and what does it mean for your company?
Bitfury's offices are currently opened in 17 countries, and we continue to expand. Our Norwegian partners were interested in cooperation. It’s a great opportunity to increase the workability of our mining sector.
But it’s difficult to mine cryptocurrencies in Ukraine because of current laws. What do you think will happen to this sphere in Ukraine?
There is a natural process throughout the world when the government tries to protect its citizens from potential problems. The regulation of new technologies does not always happen as quickly as one would think and want it to happen. I think that the situation has changed over the past four years both in Ukraine and around the world. Therefore, we are optimistic.
Ukraine is called a successfully developing country. Is there a way for blockchain to become a part of Ukrainian governmental processes?
Ukraine has a lot of talented engineers and analysts with the strong IT education. The development of any new technology depends on the number of talented professionals who work in this field. Ukraine is one of the world leaders in this sphere.
Nowadays we can see the appearing of new cryptocurrencies, tokens, ICOs. People are ready to invest without figuring out whether the project is worth investment or not. Is it a result of successful marketing in your eyes?
We see the period of maturity. We are not just talking about technology or new companies. We are already talking about the market and the industry in large. I think the market will become better. It will be easier for people to separate fraudsters from really high-quality technologies. I am sure that the new cryptocurrencies will appear. Unfortunately, the fraud exists. But due to the growing maturity of the market the number of scammers will decrease, and the average quality of products will grow.
You cooperate with SETAM, and you have provided them with software for creation of the world's first auction of seized property on blockchain basis. Why did they choose you?
Bitfury is the only global full-stack Blockchain provider. For a long time we have been seriously engaged in hardware business, the creation of ASICs for bitсoin mining, the development of the largest data centers and software solutions. We constantly work with blockchain technologies. And CETAM is a state organization that has paid attention to the world's leading company. We have seen their desire to create a truly high-quality product. Now the first stage is already completed, we are satisfied with the results and ready to move to the next stage.
Are there any examples of such implementations of technology blockchain in the state institution in any other sphere?
We have implemented our first project in Georgia. It was Land Title program for real estate registration, based on the blockchain technology. We implemented this project in Ukraine. In general, the introduction of blockchain technologies into state institutions is one of our priorities.
Do you think that blockchain can change the modern world and transform the system of state administration?
Some scientists have proved that the global level of confidence is not high and eventually continues to fall. People don’t trust states, or commercial organizations, or even media. It is called the "confidence crisis". As for the Ukraine, the level of confidence is even lower. We are implementing technologies based on the Exonum framework. Its code has open sources so developers from all over the world can study it. People will not have to blindly trust someone when blockchain is integrated. If the blockchain system is implemented, no data manipulation can appear.
Since you mentioned Exonum, tell us about your products.
We have three main software products. Exonum is a framework for private blockchains. Not anyone can become a miner or a transaction validator, but everybody can make a transaction record in the public blockchain. There is a risk both for states and for large enterprises that the blockchain will be filled with transactions. This way the commission for transactions will grow, and you won’t be able to predict the price of transactions. You can not predict how the fee will change next year. The second problem of the public blockchain is a low capacity. You can skip a few dozens of transactions per second on the public blockchain. But you can validate thousands of transactions per second using Exonum. Seems logical that the number of transactions should be large if we are working with the data of the whole state.
Sounds just perfect. But is there any disadvantages of the private blockchain technology?
The main disadvantage is the limited number of nodes that can validate transactions. We can provide different ministries with different nodes. But people can think of a collusion and don’t trust them after that. We have two ways to solve this problem. You can implement the monitoring third-party node from independent developer in order to track what is happening in the blockchain. In Ukraine we have Transparency International auditor. They proved themselves trusted. The second solution is technological, we can use a secure algorithm for the public blockchain. We’ve chosen Bitcoin, as the most secure cryptocurrency. Thus, if some historical data is changed, it does not matter whether someone deleted the transaction or added a new one, or changed anything because the hash of the private blockchain would immediately change. It would be visible in the public blockchain. This way we exclude the possibility of manipulating data in the private blockchain. You can build authentication, voting, commercial projects, insurance, lending systems on our platform.
Blockchain voting is a really interesting idea. Probably, it is a dream of many people.
Yes, I think we will have a transparent system after implementation of blockchain. It's not just about the state level. It could be the vote for the chairs in corporate board of directors. It is very important to solve the issue of identity during implementation of the voting on blockchain before the elections.
What is your another product, Crystal, made for?
It is a tool for analyzing Bitcoin blockchain. We decided to work in this direction two years ago, because many regulators did not understand how to work with blockchain. Many people think that bitcoin is good only for the dark market, terrorism financing and other eerie things. But in fact, the blockchain is the most transparent payment system. It is more transparent than banking transactions, and way more transparent than the cache. The log of all bitcoin transactions is recorded in the public blockchain. Everyone knows that they can track transactions, but no one really knows how to do this. We decided to create a product that would allow ordinary companies and regulators to see the operations. Imagine that you are selling coffee for bitcoins and accidentally received bitcoins from a terrorist. The government can come to you and blame you for the cooperation with terrorists. Crystal is able to protect you from this situation. We have a function called Risk Scoring. It allows you to track the complete path of bitcoins.
Can you tell us a few words about another your new product, connected with Lightning Network?
Lightning Network is a product developed by the U.S. team in 2015. We have been working with them since then. Bitcoin has a scalability problem. The block size is limited to one megabyte which allows to provide only a few dozens of transactions per second. Lightning allows you to do instant transactions on bitcoin. The latter depends on the number of transactions in the network. The commission will grow if the demand is high. Lightning takes a smaller commission percentage. If you want to buy coffee for a dollar, then you will pay less than a cent, which is less than the Visa's fee ‒ not mentioning the fact, that Visa has a hidden commission. Lightning is also an open-source product. It opens up a huge market of micropayments in the bitcoin industry. This is a world of payments below one hundred dollars. In the nearest future we can see anyone buying coffee for bitcoins.
At the very beginning of the conversation you mentioned that your company has opened offices in 17 countries. Can you tell us about your further plans and your position towards the monopolists of the market as well?
We believe that blockchain as a technology is the most revolutionary invention after the Internet. There are many outstanding entrepreneurs who see a great prospect of the blockchain. We will continue to develop this technology, build new hardware and software solutions. The monopoly does not really exist. All three of our software products have competitors and this is a completely normal market situation. We don’t worry about our competitors, because the more players in the market, the better the product would become.