Cryptocurrency played a turning point in this heinous war scenario, and there are no second thoughts about it. Amidst the Russia-Ukraine war, cryptocurrency emerged massively from its plummeting scene. It has become a relief for people who would otherwise be in trouble without any traditonal asset in hand.
Crypto As A New Currency In The War
Clearly, war brings no good. But for the crypto investors, it showed a somewhat different side. Why? As cryptocurrency has gone mainstream in the last few years, it has emerged as a currency one can trust for financial matters. Especially in the war scenario when almost every traditional financial system is witnessing a tough time. Is it good, bad, or neutral, it is early to comment.
Cryptocurrency, now a critical part of the global financial system, has automatically become part of the international conflict too. The war has turned government institutions into nothing but chaos, and in such taxing times, the Ukrainians have found cryptocurrency as their safe abode. And why not? Something beyond government control and bringing the ease to access finances with fewer complexities is appealing to everyone.
Reasons Why Cryptocurrency Has Emerged In The Russia-Ukraine War
- It can’t be frozen (as Central bodies do not regulate it).
- It can’t be censored.
- It works without the usage of ID.
How Crypto Is An Asset In The Russia-Ukraine War
Cryptocurrency has set an example that one can still operate their finances even in the trying times, even if the traditional banking institutions are sealed. Cryptocurrency in the Russia-Ukraine war proved to be a humanitarian tool. The rising Bitcoin Price in USD also indicated that cryptocurrency picked up during the war is a clear indicator of its potential.
In the Russia-Ukraine war, Cryptocurrency like Bitcoin is beneficial for those who already have it. And therefore, the country can utilize its crypto assets when the traditional banking system is almost on the verge of collapsing. Amidst the rising wave of crypto legalization in the past, Ukraine was the fourth country to come forward and seek the adoption of Crypto.
Although there are rising debates too due to the high volatility of cryptocurrency. Cryptocurrency has always been compared to digital gold, especially in this war. Albeit, it has its cons too, and can never be compared to the power of traditional assets. But in the current times, though it may lose half its value when converted in cash, there is still something despite nothing to hold on to. It is better than nothing at all. What do you think?
Ukraine And Crypto
Over the past few days, millions of dollars have been flown into the market to support Ukrainian troops and hacktivist groups. In the account of the seized bank accounts, almost $100 million worth of Crypto has been sent to help the army and people in Ukraine.
The country that is sinking in the battlegrounds of war has significantly benefited from the use of Crypto.
Alex Bornyakov, Ukraine’s deputy minister of digital transformation, has said that The Ukrainian government is soliciting donations in Crypto and has raised at least $54 million as of March 11.
The Ukrainian government has already spent at least $15 million of the Crypto it’s received and has brought on several crypto companies to help.
Kyiv is the headquarters and well-positioned to reap the benefits of crypto adoption. From the inception of the war, the Ukraine government has been using cryptocurrency to facilitate donations, military, and other purposes. The Ukrainian government has been flooded with donations, initially accepting only Bitcoin and Tether to around 70 cryptocurrencies. There are active bodies donating Crypto, but most come from individuals across the globe.
Digital art commoditized as NFTs or Non-Fungibke tokens have also become a prime donation source in the current scenario. With hundreds of NFT donations to Ukraine, it has undoubtedly added to the crypto fund the country can withdraw. However, the crypto donations are a small portion of the large chunk billions of dollars in international military and humanitarian aid flowing to Ukraine from partner governments.
Even the government has set up a website to centralize its cryptocurrency fundraising efforts. It explains the government is accepting help in cryptocurrencies like Bitcoin and meme-inspired dogecoin. From fiat currency to cryptocurrencies, Ukraine is receiving assistance to continue its war against Russia. As not everything can be purchased using Crypto, the officials are open to accepting fiat currencies also to leverage the purchases.
Russia And Crypto
Unfortunately, the war headed at the time when the policymakers were ready on how to regulate digital assets. But the dominance of the cryptocurrency in the Russia-Ukraine war could largely influence global perceptions.
It’s true to say that the Russian-Ukrainian war has made Crypto an asset in unacceptable situations. Talking from the other side, the darker side of the war, before the invasion of Ukraine by Russia, it was expected that cryptocurrencies could dull the impact of economic sanctions.
Over the few weeks, multiple countries have blocked Russia from many fronts, devastating Russia’s economy. The concern that spread like wildfire was Russia could use Crypto and move money undetected. According to a report from the New York Times, Russia is already building tools to create a digital ruble and hiding the origins of its transactions.
Michael Parker, a former federal prosecutor, told the Times it would be “naive” to think Russia hadn’t gamed out a scenario where sanctions were imposed, and it would have to find alternatives.
The powerful authorities from across the globe are after Russia for cutting down or blocking the Russian address users.
In the Russia-Ukraine war, cryptocurrency has become equally vital for Russian citizens as much as for the Ukrainians. But being the third-largest Bitcoin miner in the world, it could be unattainable to cut down Russia’s access to Crypto. The prime reason is that not all Crypto platforms in Russia ask for the identity of their customers, making it difficult to track the origin or addresses of the transactions.
Russia also has a long history of Crypto linked cybercrime and illegal activities like money laundering and ransomware. The reports from Chainalysis depict that three-quarters of the money made through ransomware attacks in 2021 went to hackers linked to Russia. Even the Ukrainian government was targeted by continuous cyberattacks that asked for ransomware in the form of bitcoin.
Any currency can be used to participate in unsavory activities of the war to make things go smooth. If cryptocurrency can be used to model the purchases in the war, the traditional currency can also be used to buy drugs and weapons. But cryptocurrency has an edge of being one virtual asset to operate without any intervention.
The Limitations On The Cryptocurrency Usage
Many Ukrainians are using cryptocurrency to deal with their finances in the war. Those who are escaping the country in light to see a better world are taking their Crypto along. They might convert them into cash once they settle with safety. Others are looking to save Crypto to build up their lost wealth due to the devastating fall down of the economy.
It is surprising that in the last week of February, trading on the Ukrainian crypto platform Kuna reached its highest level since May 2021.
Though crypto usage seems quite a relief during the war when people are getting bankrupt. But with the flowing perks of using Crypto, there are attached hurdles/limitations. Using Crypto in such situations is entirely not easy. It comes with its own set of challenges like:
1. Internet & A Device
In times of war, having access to a stable internet connection and a mobile device or laptop could be tough to crack. But these are essential requirements to operate cryptocurrency.
2. Learn Or Access Cryptocurrency
Having cryptocurrency doesn’t make sense if you are not acquainted with how it works or how you can withdraw it. In times of crisis, it could be a challenging task to learn a new skill set and pick it up quickly.
3. The Cryptocurrency Complexity
With the pool of cryptocurrencies and several introduced every day, it becomes challenging to learn about them and sharpen your knowledge. On top of that, if you are eager to convert your assets into cryptocurrency, the financial system needs to be in a seamless workable condition. When it is crashing in the war, it makes no sense to take this giant risk.
Cryptocurrency Heroism In The War
It is not the first time cryptocurrency has been part of a global crisis. There have been many incidents when cryptocurrency has turned crucial. But in the recent Russia-Ukraine war, it is at the center of the complete financial system.
Cryptocurrency is helping the people who are fleeing out of the country as the only source to operate finances. On the contrary, it comes with a con of its usage with no access to workable system (stable network and a device). Currently, it is too soon to comment how cryptocurrency will model the international conflict or will hurt the sentiments?
What we know right now, this time, cryptocurrency has a role to play in the disastrous Russia-Ukraine conflict, with a consequence nobody is aware of. Whether it is playing a good or bad part, it is doing what it has to do—giving people a way to deal with their finances outside the already collapsed traditional banking systems.
The war has also blessed Bitcoin price with a jump of 15% in the last seven days (at writing). As per experts, the vast bitcoin demand is the repercussion of the regulations of the current trends in the world. Hence, cryptocurrency has emerged as a hero in a dire situation.
Everyone is praying for the world to heal and the situation to get better. In the tough times when the citizens are getting homeless and looking for basic needs, cryptocurrency provides relief to some extent — to the people, the government, the homeless, and the soldiers.