Since Russia invaded Ukraine, cryptocurrencies have been in the news, with the ever-volatile Bitcoin in high demand in Russia and other countries, and people flock to buy Bitcoin amid the war.
Cryptocurrency has become a more mainstream component of the global financial system, which means that it will inevitably become a part of international conflict, for better or worse. As Russian armies enter Ukraine, this is on full show. Some Ukrainians have decided to buy Bitcoin as an alternative to Ukrainian financial institutions, restricting access to bank accounts and foreign currency. It’s difficult to rely on traditional banks when governments are in upheaval and there’s a fear of surveillance. As a result, a somewhat anonymous system that does not involve the government is tempting.
As the ruble has been pummeled by Western sanctions to squeeze Russia’s economy and cut it off from the global financial system, cryptocurrency trading has exploded in Russia, and many investors have rushed to buy Bitcoin. Bitcoin fell as much as 8% after Russia launched its attack on Ukraine, as investors fled riskier assets before clawing back the losses. Bitcoin even reached a new high of 14.5 percent, its greatest day in a year, and is currently up 12 percent since the invasion began on February 24.
Trading volumes between the ruble and major cryptocurrencies reached 15.3 billion rubles ($140.7 million) thrice from a week earlier. The statistics indicated that rouble-denominated trades using Tether — a so-called stablecoin designed to maintain a constant value — reached 3.3 billion rubles on Monday, the biggest this year and nearly five times more than a week earlier.
According to the data, Russians rush to convert their wealth to cryptocurrency as they opt to buy Bitcoin. The war has added to the idea that Bitcoin is “not only a speculative asset but also a seizure-resistant, policy-independent, longer-term store of wealth.
How Crypto Is Fueling Donations to The War
Hundreds of millions of dollars in the cryptocurrency have been sent to Ukraine to assist the army and hacktivist groups. According to Alex Bornyakov, Ukraine’s deputy minister of digital transformation, about $100 million in cryptocurrency has been given to help Ukrainians in recent weeks. As of March 11, the Ukrainian government had raised at least $54 million in cryptocurrency donations. The Ukrainian government has already spent at least $15 million of the cryptocurrency it has received and has enlisted the support of several crypto firms.
The government has also developed a website to organize its crypto-based fundraising efforts. This new website claims that Ukraine is collecting a variety of cryptocurrencies, including Bitcoin and the meme-inspired Dogecoin and fiat cash donations, helping its war against Russia so anyone who decides to buy Bitcoin or other cryptocurrencies can donate. Because the government can’t make all the purchases it wants using crypto, part of the donations is converted into fiat currency to buy goods.
It’s debatable how valuable cryptocurrency is for people in need or organizations needing donations. Many conventional currencies are being used to donate to Ukrainian organizations, albeit one such group has been banned from Patreon for fundraising for military supplies, which is against the platform’s guidelines. To use crypto, you need a rather advanced understanding of technology, and if you weren’t previously prepared, the start of a conflict might not be the best time to attempt.
Bad actors frequently use crypto, and Russia might use it to escape sanctions, which is now the US and its allies’ principal weapon against Russia. Because of its widespread use in cyber warfare, those who own crypto may become targets for cyberattacks, and while anonymity is one of crypto’s key draws, it isn’t infallible. All the characteristics that make crypto appealing to those under attack also apply to those carrying out the attack.
Cryptocurrencies, in general, are extremely volatile. While proponents of the crypto space frequently assert that bitcoin and other cryptocurrencies are “digital gold”, their value has fallen in the face of global uncertainty, undermining the argument that they represent a haven. Consider a scenario in which you take $1,000 out of Ukraine in a cryptocurrency, and it has lost half its value by the time you can convert it back to cash. But crypto could be the most convenient means to obtain funds during a financial emergency, forcing people to buy Bitcoin during the war.
