Russia-Ukraine Conflict: The Role of Cryptocurrency During the Wars

Russia-Ukraine conflict continues to cause widespread devastation to human life and infrastructure, the crypto community has discovered a way to donate emergency funding to the war-torn nation in the form of digital currencies to aid in the acquisition of resources and other necessities.

New-age digital assets and even cryptocurrencies are unregulated and decentralized in nature which can facilitate instant cross-border fund transfers. With one Bitcoin, for instance, you can transfer over $45,000  immediately from one part of the world to another, without the need of any bank or broker whatsoever.

I can understand that at the moment this thing should not be so important for you and me. But in Ukraine, the same feature of cryptocurrency helps to collect emergency funds. Time and again, cryptocurrency has emerged as a powerful financial tool for countries that encountered tough times.

Hey guys, I’m Kevin, welcome to another article of The Proficiency Post, and in this post, we are going to take a look at some latest instances when countries struggling with a national crisis and war-like situations have turned to crypto community for help.

In recent days, we saw major geopolitical turmoil unfold between Russia-Ukraine. After weeks of border tensions, Russian troops entered Ukrainian territories on February 24. The attacks caused major damage to the infrastructure and residents of Ukraine.

 

Damage during Ukraine-Russia conflict
Damage during Ukraine-Russia conflict   Image Source: Business Today

 

Ukraine Gathered funds from Cryptocurrencies

Cryptocurrencies have played a previously unseen role in the Ukrainian war, assisting the government in raising millions of dollars to fund its struggle against the Russian invasion.

Not to mention the damage it has done to the economy. Amid the war-caused economic instability, the government of Ukraine sought help from crypto investors to gather some emergency funds. Within days of posting official wallet addresses for crypto donations, Ukraine gathered at least over $80 million in crypto assets such as Bitcoin, Ether, and Dogecoin among others.

Mykhailo Fedorov, the vice president of Ukraine also urged Elon Musk to help reel in more donations in Dogecoin. Ukraine had been mulling over the status of cryptocurrencies until some time ago. But as soon as Ukraine saw the magnitude of help crypto assets served its war-torn nation, President Volodymyr Zelenskyy legalized crypto in the country.

 

Mykhailo Tweet

 

While, unlike El Salvador, Ukraine has not adopted Bitcoin or any other crypto as a legal asset, the country has pledged governmental support for national and foreign crypto exchanges as part of its new crypto legalization law.

 

Also Read: Algorand (Algo): The Future of Crypto | El Salvador Runs on Algorand Network

 

What are the advantages of donating to cryptocurrency?

Aid packages delivered to Ukraine in fiat money by the US and the EU overwhelm cryptocurrency donations, while the latter allows individuals to participate.

The Giving Block, a US crypto charity, told AFP that bitcoin donations have the potential to attract “younger donors” looking to support a variety of causes. Chobanian points to the decline in the value of the Ukrainian hryvnia as a result of inflation.

The speed of the transfers is an added benefit of donating in cryptocurrencies. Validation of bank wires between two countries can take up to 24 hours. Cryptocurrency transactions, on the other hand, often require less time.

Another reason cryptocurrency donations are valuable in Ukraine is that they are less influenced by geopolitical or economical issues.

Russia imposed Penalties

Meanwhile, Russia has been imposed various penalties for waging a violent, military war against its neighbors. In fact, several crypto exchanges like Binance and Coinbase were also suggested to block Russian wallet addresses, to further isolate their economy that was already crashing.

Russia has been imposed various penalties for waging a violent, military war against its neighbors. Crypto exchanges kept innocent Russian investors in mind, and have refrained from blocking all Russian wallets.

 

Cryptocurrency is allowing Russians to escape Putin’s sinking economy, but it is also being utilised by astute Ukrainians to fund the grassroots defense of their nation. Nick Blakiston

 

The Russia-Ukraine conflict is not the only horrid situation when cryptocurrencies were used as an emergency financial enabler. In 2021, when the Taliban was taking over Afghanistan, virtual tokens surfaced as safe hedges against political upheaval.

At the time, Afghanistan emerged as the 20th out of 154 in terms of global crypto adoption. The overall crypto market witnessed frequent fluctuations in recent days, with market sentiment towards it changing every second day.

 

Crypto Sector Improvement

The crypto sector improved its health and took its market cap close to $2 trillion. At the beginning of February, the crypto market’s worth stood at around $1.72 trillion. As for now, India has no plans to introduce cryptocurrency services, officials informed the Upper House this week. RBI’s work on the CBDC is still underway.

  1. Indian exchange CoinSwitch Kuber has rolled out a new feature called the Recurring Buy Plan (RBP) to enable long-term investors to systematically put money in crypto assets. The plan will require users to fix a monthly amount dedicated to purchasing some units of a particular cryptocurrency for 12 months. This will give investors better chances of bagging bigger average prices.
  2. The Swiss city of Lugano decided to accept Bitcoin, Tether, and LVGA tokens as ‘de facto’ legal tenders.The mayor, Michele Foletti, and Polo Ardoino, CTO of Tether, along with city director Pietro Poretti, jointly announced the news.
  3. US President Joe Biden has signed executive orders on the government oversight of the cryptocurrency, directing the US Federal Reserve to explore whether the central bank should jump in and create its own digital currency.
  4. Dubai also now has a proper regulatory framework to govern the crypto industry.

Meanwhile, the UK has banned advertisements of Floki Inu coin calling them irresponsible and exploiting investors’ inexperience.

Market Watch

After months of strolling low on the price charts, Bitcoin touched values exceeding $45,000 Ether followed Bitcoin and traded at around $2,900. Bitcoin and Dogecoin overtook the Russian Ruble in terms of value, indicating the market’s reliance on them amid high-pressure situations.

Stablecoins such as Tether and USD Coin continued to perform well given that they are collateralized by an underlying stable asset such as gold or the US dollar. On some days, Dogecoin and Shiba Inu climbed up the price ladder but on most days the popular meme coins registered losses.

It’s time to look at how some of the major tokens are performing especially in these tumultuous times. As the global financial system is closely linked with crypto, it is almost certain to affect some of the major tokens as well.

if you have any questions around crypto or any jargon that you do not understand do comment below, and we will have an expert answer them for you. Thanks for reading.

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