Since Russia invaded Ukraine, cryptocurrencies have frequently been in the news, with demand for the always-volatile bitcoin in Russia and other countries. Both countries have adopted cryptocurrencies as an asset to gain victory in the ongoing war.
However, this article will look into the role cryptocurrencies play in a time of war and how this can affect the entire crypto industry.
Cryptocurrency’s Role in Russia vs Ukraine Conflict
The geopolitical environment has changed due to Russia’s invasion of Ukraine, and a durable peace seems unlikely to be reached anytime soon. The disproportionate role that cryptocurrencies have so far played in the fight is likely one of the less-discussed parts of the conflict. The usage of digital currencies has been essential in furthering the objectives of different parties in both the Russian and Ukrainian camps and the conflict’s global scope.
In a letter to shareholders dated March 24th, BlackRock’s CEO, Larry Fink, admitted that the possibility of the war’s impact on accelerating digital currencies is a less-discussed component of the conflict. Nevertheless, the significance of cryptocurrencies has not gone unnoticed. Ukraine and Russia are currently ranked 4th and 18th in Chainalysis’s 2021 Global Crypto Adoption Index. Both countries would undoubtedly acknowledge and support this trend of country-level crypto adoption.
Meanwhile, Officials from Ukraine published the addresses for two cryptocurrency wallets on their Twitter accounts before the crisis even began, providing donors with a direct and obvious address to deposit donations. The Ukrainian conflict has shown how quickly and cheaply borderless value units may be exchanged without go-betweens.
Additionally, crypto enthusiasts view Bitcoin as “digital gold,” a convenient location to preserve funds during conflict or calamity. The importance of cyberattacks as unconventional warfare is expanding, increasing the value of Bitcoin, particularly as a secure form of value storage.
Crypto advocates claim that by giving common Russian and Ukrainian citizens a store of value and a means of exchange, crypto might lower the humanitarian costs of the sanctions and the conflict. They also emphasize the value of cryptocurrency as a complementary form of payment for donations to the Ukrainian government.
Meanwhile, A National Security Council officer reportedly claimed that a cryptocurrency is a useless tool for evading sanctions, even though the U.S. Treasury Department is keeping an eye on this. On the other hand, Russia acknowledged at the end of March last year that, in the face of sanctions, it would accept Bitcoin as payment for its oil and gas exports.
Conclusion
According to Noelle Acheson, head of Market Insights at New York-based Genesis, Russia vs Ukraine conflict has bolstered the idea that bitcoin is not just a speculative asset, but is also a seizure-proof, independent of policy, and longer-term store of value. In theory, cryptocurrency may be used to dodge sanctions. Still, technological hurdles, market dynamics, and a lack of liquidity will make it impossible for sanctioned Russian entities to do so on a large scale. Additionally, Russians are increasingly using Bitcoin to protect themselves from exposure to their potentially collapsing currency.
