The role of crypto in the war between Ukraine and Russia =

The war between Russia and Ukraine is disruptive on so many fronts. Obviously for, in particular, Ukraine, but also for millions of citizens and entire organizations, governments and processes. Everything is razed to the ground, where crypto and its applications can offer perspective. The war in Ukraine is the catalyst of cryptocurrency adoption. In this article I will take you through how both Russia and Ukraine use crypto during this wartime, but also what you can contribute and what the advantages and disadvantages of the wartime crypto market are. Are you reading along?

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  • View quickly
  • Cause of the war between Ukraine and Russia
    • Sovereignty of Russia
  • How is crypto used by both countries?
    • Crypto in Russia
    • Crypto in Ukraine
  • The role of cryptocurrencies in the crisis
    • How are donations in crypto used by Ukraine?
    • Where do the crypto donations end up?
  • Pros and Cons of Crypto in Wartime
    • Advantages
    • Cons
    • Why is crypto not booming?
  • Conclusion

Cause of the war between Ukraine and Russia

The war between Ukraine and Russia is big news for the whole world. We are all concerned with the Ukrainians who are fleeing and fighting against the influence of Russia. Or rather the influence of Putin. But what actually caused this war?

Tensions have existed between the West and Russia for centuries. Around the Middle Ages, the Tsars were already fiercely against the modern West and this did not change during the era of communism. In the early 1900s the Tsar’s reign came to an end, after which the communists took over. In fact, since Vladimir Putin has ruled the nation, he has become many times more vehemently against the enlargement of the European Union and NATO.

Anyway, if the tensions have existed for centuries, why the escalation now? In the video below you can see the influence of war on crypto, or vice versa:

 

Sovereignty of Russia

Sovereignty means, in the case of Russia, that Putin has supreme authority within his own territory. He therefore does not appreciate the fact that the West exerts influence on his regime by supporting uprisings. Think of Ukraine, Kosovo, Georgia and other countries in Central Asia.

Ukraine is moving more towards the West than to neighboring Russia, and Vladimir does not appreciate that. What started as a showdown, where everyone assumed that Putin wanted to show how much influence he could actually exert, escalated enormously on February 24, 2022 when Russian troops invaded Ukraine from Crimea.

The exact cause of the war between the Russians and Ukraine is actually not clear. It probably has to do with Vladimir Putin who wants to protect his country against further disintegration. The influence of democratic groups threatened his, somewhat imaginary, power. For months he denied the attack plans, but at the end of 2021 Putin threatened to implement military-technical measures if NATO did not want to withdraw from the Baltic countries and Poland.

Eventually it became clear that he stands by his opinion that Ukraine belongs to Russia and on February 24, 2022 he invaded the country. Since then there has been a gigantic refugee crisis, total destruction, many (fatal) victims and a worldwide problem. Now that Ukraine has started the process of becoming a member of the European Union, relations will not improve for the time being. Time will tell how long the war will last, but how do we make it through relatively unscathed until the end, financially speaking?

 

How is crypto used by both countries?

Crypto in Russia

Russia’s crypto market was valued at more than $200 billion in February this year, more than 12% of the global market. A large part of the population was then in possession of cryptocurrencies, after which the Russian Ministry of Finance submitted a draft law.

A ban on crypto payments for services and goods was enforced, including an immediate cap on the number of rubles people can invest in digital currencies. Crypto mining was also restricted.

At the end of March, Pavel Zavalny (including chairman of the Russian Energy Committee) announced that Bitcoin is accepted by Russia when we talk about the export of natural resources. We, as residents of the West, are allowed to buy essential gas from Putin’s country, by bartering with rubles and gold.

Countries that do not ‘pressure’ Russia are allowed to pay in their own national currency, such as rubles, lira and yuan. In short, if you support Russia, the possibilities are endless, but are you working against it? Then you have an endless battle.

Crypto in Ukraine

Ukraine was still a bit of an outsider in the crypto market, but that is about to change. Mykhailo Fedorov, the Minister of Digital Affairs, already proposed the legalization of crypto trading for citizens last year. A proposal was written and last month (March 2022) Zelensky made history by signing it.

By legalizing the crypto market in Ukraine, it is possible to use the donations in Bitcoin (BTC) in the fight against the Russians. According to the Ministry, this is “an important step in taking the crypto market out of the shadows…”. More than 50 million euros have already been donated in crypto currency in a short time:

 

The role of cryptocurrencies in the crisis

This is the first global war where cryptocurrency played a prominent role. Governments are considering new laws and regulations and the conflict between Russia and Ukraine is being affected in several ways. By introducing crypto within the borders of Russia, influence can be exerted on the authoritarian regime of Moscow. In this way there is an alternative to the ruble, which offers economic perspective, even though Putin would not like to see this, of course.

The opponents of crypto mainly talk about encouraging illegal transactions and a way for entities to circumvent sanctions.

Digital coins are important for Ukraine, because they can use them to attract donations. The Ministry of Digital Transformation has developed a great site for this, with a catchy slogan: “don’t leave us alone with the enemy”

They have already raised over $60 million and with over 70 coins you can support the Ukrainians in their ‘fight for freedom’. The largest exchange in the Eastern country, Kuna.io, contributes to the collection of as much support money as possible. Most of the donations to date have come from consumers around the world.

 

How are donations in crypto used by Ukraine?

It is modern way of crowdfunding, which has several advantages and disadvantages. We will discuss these later in this article. Let’s first see what Zelensky mainly does with all these funds, to strengthen his nation.

For starters, he can execute transactions more easily, as there is no need to involve a third party. This prevents the risk of blockages, because there is no power with other parties. The army also receives support, with which they invest in non-lethal materials, such as bulletproof vests and other materials to support the Ukrainian soldiers.

In addition, Russian soldiers are also paid in Bitcoin (BTC) if they surrender. They will then receive 5 million Russian rubles, which is more than € 43,000, and they will be allowed to return to their home country from Ukraine without punishment.

A special crypto project has also emerged, which makes it possible to donate and invest: HUKR (Help Ukraine). You will find a promo video below, where you can gather some more information about the project:

 

Where do the crypto donations end up?

With their slogan “Invest to donate” they transfer the funds to charities, such as:

  • Revived Soldiers Ukraine
  • Nova Ukraine
  • USA-Ukraine Foundation
  • International Committee of the Red Cross
  • Hope for Ukraine
  • LELEKA Foundation
  • Fund for Children’s Aid Ukraine

Money is used to purchase essential resources for citizens, but evacuations are also managed.

Pros and Cons of Crypto in Wartime

Advantages

  • Carrying out transactions without a third party
  • More attention to regulation
  • Stagflation* paves the way for a new financial system

Stagflation is a portfolio of inflation and stagnation. When inflation is high, economic growth slows and unemployment remains high.

Cons

  • Any negative impact on the (crypto) market
  • Russian users are preferably not blocked because of the decentralized nature
  • Additional volatility

Why is crypto not booming?

The crypto market is made for this situation. A decentralized, anonymous and digital coin is exactly what we need. “Wait until war breaks out” and “Wait until censorship by big banks” are common statements by crypto fanatics. However, now that it is war, there is no booming business in the crypto industry. How is that possible?

According to experts, there are several explanations for this. It is important to know that this does not mean the end of the decentralized system, on the contrary. The problem is that the ‘ordinary citizen’ still has too little understanding of crypto. Even the elite in Ukraine struggle to convert their assets into cryptocurrencies, partly because the internet connection is so bad.

Another factor is the great volatility of Bitcoin (BTC). Due to the extreme price fluctuations, the coin is not yet usable for economic and political purposes, such as counteracting instability in the economy. Ukrainian Deputy Minister of Digital Transformation, Alex Bornyakov, said the following about the role of crypto in the current crisis. “In a situation like this, where the national bank is not fully operating, crypto is helping to perform fast transfers, to make it very quick and get results almost immediately.”

He also spoke carefully: “I don’t think crypto is playing a major part, but its role is essential in this conflict in terms of helping our army.”

Conclusion

In this article, we touched on all kinds of aspects related to the war between Ukraine and Russia and cryptocurrencies. There are both advantages and disadvantages to using crypto, as the market is far from being integrated everywhere. An advantage is definitely the decentralized character, but there is of course much more at play in times of war. The fact that money can be collected independently, without the involvement of major powers, is of course mindblowing. Both the Ukrainian defense and civilians can receive funds to bring themselves or their citizens to safety. In this way money is also available to invest in weapons or aids, which the Russians cannot deny access to.

All in all, you can say that the use of cryptocurrencies can increase and guarantee the development, safety and reception of people worldwide. In addition, it offers opportunities to collect money without obstacles and to use it where it is most needed. As more people become acquainted with the world of crypto and convert (part of) their assets into digital currencies, a significant growth spurt is expected to take place.

Note: if you have become enthusiastic about crypto and its application? Then do your own research. Don’t be guided by the enthusiasm or opinion of others or by your gut feeling, but do actual research. Consult our complete database of blogs, videos and videos on all crypto topics, delve into DeFi and see what fits your budget and needs. Only use money you don’t need to survive and read up on the risks.

Do you have any questions about this impactful war or other concepts that came up in this story? In our FAQ you will find the answers quickly and easily. What also works well is to google your question + ‘AllesOverCrypto’. There is a good chance that we have already written an article in the past about the subject that you would like to know more about.

Do you want to talk more about the developments around Russia and Ukraine and the role of crypto in the whole? Register quickly with our AllesOverCrypto Facebook group! Here, our crypto and blockchain experts are ready to answer your questions. Will I see you there?

Photo by Oleksandr Pidvalnyi

 

 

 

 

 

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