Cryptocurrency as a Game-Changer in Russian-Ukraine Invasion
Crypto War? That’s what some people are calling this conflict. Cryptocurrency is unlikely to be the most pressing issue for Ukranians who are suffering from the Russian invasion . However, alternative economies are often born out of war’s devastation.
Ukraine has received over $ 65 million, which has been split between the country’s defense and humanitarian aid efforts thus far. This is a major showcase of how blockchain technology is assisting Ukrainians during this period of conflict.
People who are under siege will find crypto appealing for the same reasons that those who are being sieved find it appealing . It’s possible that Russia could use crypto to evade sanctions from the United States and its allies.
In response to international sanctions, Russia on the other hand may have to accept cryptocurrency as payment for its energy exports.
How Ukraine Raised Millions of Donations in Cryptocurrency
Cryptocurrencies have helped a great deal in Ukraine’s war against the Russian invasion , raising millions of dollars for the government to use in its fight.
Cryptocurrency is proving to be an invaluable resource for a country still reeling from the devastation caused by the civil war.
A year and a half ago, Ukraine’s minister of digital transformation revealed a draft of the legislation to legalize digital assets . In support of this, the Ukrainian central bank developed an electronic currency known as the “e-hryvnia,” making their country more cryptocurrency friendly.
In the midst of a bloody conflict, why has Ukraine turned to cryptocurrency? And how is the fledgling crypto industry changing Ukraine’s image and impacting the country?
Two donations were initially established, one for economic purposes and the other to help the Ukrainian military. However, when violence broke out in Ukraine, the funds were merged and concentrated on supporting the country’s armed forces.
During the early stages of the conflict, Ukrainian authorities posted addresses for two crypto wallets on their Twitter account, providing donors with a straightforward location to send donations to. More than $ 10.2 million (9.2 million euros) was deposited into the wallets within the first four days of the invasion .
It is estimated that the “Crypto Fund for Ukraine,” which is run by Michael Chobanian, the co-founder of Ukrainian crypto-exchange Kuna, has received more than $ 100 million in donations as regards the project .
UkraineDAO has also sold an NFT depicting the Ukrainian flag for $ 6.5 million in Ethereum . The NGO will receive the money from the sale. Bitcoin and Ethereum have gained a great deal of the funds so far, but US dollar stablecoins make up a substantial proportion of the total.
When it comes to cryptocurrency security, there is a great deal of nuance, because if you don’t safeguard it, someone could hack you and steal all of your crypto, “Kuna, the country’s largest exchange, explained.
Aside from protecting your assets , the ability to exchange them into various fiat currencies is just as important. A portion of the donations must be converted back into fiat currency before they can be used to purchase goods on behalf of the government.
The Russia-Ukraine invasion will spur people to look for a more decentralized financial system that is easier to verify. To date, the cryptocurrency movement has been beset with greedy adherents, whose kooky volatility in value have hampered its acceptance as a viable alternative for conventional economic tools.
Cryptocurrencies have already been at odds with policymakers over whether or not they are securities that need to be more tightly regulated. War has shifted attention away from crypto and toward financial fraud and other financial crimes, however.
Food, outfits and bullet-proof jackets were also given to the armed forces thanks to these funds, which were dispersed across the country. Ukraine’s cyber warriors have allegedly burglarized Russian government websites, provided intelligence, and crippled military systems , as well, with the help of this program.
This video by Global News tells us more about how cryptocurrency is shaping the Russsia-Ukraine war.
Russia Trying to Avoid Sanctions with Crypto
According to a growing number of analysts, Russia will almost certainly turn to cryptocurrencies as a way to avoid sanctions in response to Russia’s invasion of Ukraine, but with limited success.
According to crypto experts in Russia, authorities and sanctioned individuals may be able to use this setup to protect their assets while continuing to make international payments. In terms of sanctions and cryptocurrency, Elliptic’s head of policy and regulatory relations, David Carlisle, stated this week , “It’s quite likely that Russia will try to engage in some crypto activity.”
Both the European Union and the United States have expressed concern about Russia’s potential use of cryptography to circumvent sanctions.
Sanctions were imposed on the country’s banks, state-owned enterprises, and elites after Russia invaded Ukraine following the annexation of Crimea. Ruling oligarchs and other individuals with ties to Russian President Vladimir Putin have been banned from using the SWIFT international payments system .
There has been a partial freeze on the assets of Russia’s central bank, preventing it from using its $ 630 billion in foreign reserve war chest to support the plummeting ruble. Russia’s citizens and businesses are scrambling to convert rubles into foreign currency, while others are attempting to invest their money in cryptocurrencies.
As a result of this, Russia’s best hope of evading sanctions is through cryptocurrency. The use of so-called privacy coins, a type of cryptocurrency that hides users’ identities, may be used by those subject to sanctions, according to experts in anti-money laundering and cryptography. As Carlisle points out, Russia may be able to replenish its coffers through the use of cryptocurrency.
Iranians have been creating bitcoins and other digital currency through the energy-intensive computational process known as “crypto mining,” which he said should be encouraged in the gas-rich country . North Korea’s pattern of launching ransomware operations against Western organizations may also be replicated, he said.
There were nearly 26,000 suspicious Russian activity accounts suspended by Coinbase , which took immediate action to prevent further damage. Decentralization advocates are often outraged by actions like this, but compromise is an essential part of gaining wider acceptance and adoption. The army’s basic needs were met through the development of an infrastructure based on a digital wallet (Crypto).
These currencies are not issued or managed by a central authority like a central bank, and this is why bitcoin and other digital currencies are frequently decentralized. Bypassing the traditional financial system is essential when sending cryptocurrency. “Peer-to-peer” transactions can be carried out between users without the need for third parties.
Has Blockchain Tech Finally Proven its Utility?
At the peak of the conflict, Ukraine enacted a law supporting crypto exchanges to operate in the country and for financial institutions to open accounts for crypto firms . The law also stated that tax and civil codes will be amended by Ukraine’s Ministry of Finance to include virtual assets. Ukraine and the rest of the world have taken a major step forward in the perception of digital assets.
Millions of Ukrainians have been displaced as a result of Russia’s invasion. Many people have no choice but to turn to cryptocurrencies for quick access to cash because bank limits on cash withdrawals have been raised . The report acknowledges that the demand for cryptocurrency in both Ukraine and Russia has increased significantly since the conflict began. Russian ruble purchases of bitcoin tripled, while purchases in Ukraine nearly doubled.
In an interview, London School of Economics visiting fellow Garrick Hileman thinks that cryptocurrencies have an advantage in this war situation. ” Transactions can be completed even when national infrastructure is down or the conventional banking system is slow, as long as you have access to the net and a computer “. Hileman cited this as one of the advantages of crypto.
As a result of the conflict in Ukraine, private currencies have begun to make their way into the mainstream economy.
At present, there are some vendors who accept cryptocurrency but will not exchange it for fiat because of Ukraine’s unsteady financial system. That’s due to the fact that the exchange rate between the hryvnia [the national currency] and dollar seems wobbly at this time . Many believe it’s safer to store their money in crypto.
Conclusion
The Russia-Ukraine conflict has changed the perception of cryptocurrencies, making them more mainstream. Given that the Ukrainian government is also seeking for crypto donations, crypto currency has become of mainstream importance in the war.
It’s also clear that if the Russian government begins using cryptocurrencies to avoid sanctions. The United States and Europe will impose strict regulations on the use of digital currency said by Purushottam Anand, founder of Crypto Legal.
Conflict zones may see an uptick in the use of cryptocurrencies, which could pave the way for the technology to become a viable alternative payment method. When the fiat monetary system fails, cryptocurrency will be the only our last resort. However, many cryptocurrencies are plagued by high processing fees and slow transaction speeds. Therefore, this technology hasn’t yet gained widespread legal acceptance in monetary transactions in many countries.
One can debate whether or not a crypto-based channel is useful for those in need or organizations in search of donations. If you don’t already have a good grasp of technology, it might not be the best time to learn how to use cryptography during a war.
Those who already possess crypto will likely benefit most from it for now. Taking Ukraine, which has been assertively promoting its own crypto industry over the past few years, that could amount to over a million people.