Summary

The article discusses the significant role of cryptocurrency in the context of the Russia-Ukraine conflict, both as a means of fundraising for Ukrainian military efforts and as a potential tool for Russia to circumvent economic sanctions.

Abstract

The outbreak of war between Russia and Ukraine has brought cryptocurrency into the spotlight, highlighting its dual-use nature in international conflict. The Ukrainian government and pro-Ukrainian supporters have been leveraging cryptocurrency to fund resistance efforts, with donations in Bitcoin and other crypto-assets surging in response to the invasion. Conversely, the article suggests that Russia may have considered cryptocurrency as a means to mitigate the impact of Western economic sanctions, given its ability to operate outside the traditional global interbank system. The author emphasizes that despite skepticism and criticism, cryptocurrency is proving to be a powerful financial tool with real-world implications in the current geopolitical landscape.

Opinions

The author acknowledges skepticism about cryptocurrency but argues that its role in the Russia-Ukraine conflict demonstrates its relevance and utility beyond speculative investment.
There is an implied criticism of those who dismiss cryptocurrency as merely a Ponzi scheme, stating that they are overlooking its broader implications and applications.
The author suggests that the timing of Ukraine's legalization of cryptocurrency and Russia's exploration of it as a financial tool may be connected to the escalating tensions between the two nations.
The article highlights the importance of further research into how cryptocurrency is being utilized in the context of war and international sanctions.
The author expresses a need for open-mindedness and investigation into the use of cryptocurrency, rather than outright dismissal or prohibition, especially in light of its use in supporting Ukraine's defense.
There is a recognition of the potential for cryptocurrency to be used for both beneficial purposes, such as aiding Ukraine, and more nefarious ones, like evading sanctions.
The author points out the rapid evolution of the situation, with cryptocurrency donations growing significantly and becoming a critical source of support for Ukraine.
The article notes the irony and complexity of the situation, where cryptocurrency—often criticized for its volatility and lack of regulation—is now playing a crucial role in a major international crisis.

War Has Broken Out and Crypto Will Play a Big Role

And you thought it nothing more than a Ponzi scheme.

Fighter jets. (Photo by UX Gun on Unsplash)

Today, Russia finally moved against Ukraine. The news was all over global media.

I couldn’t focus. I was feeling anxious all day:

A massive pandemic.

The mother of all stock market bubbles.

And a war that begins in Europe.

Why does it sound like the 20th century all over again?

Yesterday, I published a piece on cryptocurrency:

People Don’t Care For Crypto, So Why Do I Bother Writing About It?

There is probably not a topic more divisive than this.

medium.com

In this article, I wrote that the Russian government was considering regulating crypto as a form of currency, and that Ukraine had decided to legalize bitcoin and other crypto-assets. I also suggested that this had to do with the escalating Russian-Ukrainian tensions:

Does the timing of this decision have anything to do with the Russo-Ukrainian conflict? I don’t know, I am not a geopolitics expert. Maybe it does.

When the news broke out today, the dots finally connected for me. The conflict between Russia and Ukraine will involve cryptocurrency in some manner.

According to WIRED Magazine, pro-Ukrainian supporters have been funding the resistance efforts for the past couple of months with cryptocurrency.

On the flip side of the coin (pun not intended this time), Putin must have been planning his offensive for a long time.

As Emily Flitter and David Yaffe-Bellany — writing for the New York Times — point out, Russia has explored cryptocurrency as a backup plan to manage economic sanctions by Western countries.

Knowing that Western powers would immediately move to impose economic sanctions on Russia, cryptocurrency was probably considered as a backup option to bypass the global interbank system to transfer funds.¹

The Russian ruble dumped hard against the dollar and other major currencies like the euro immediately after the Russian military made the move against Ukraine.

USD/RUB FX rate, accessed Yahoo Finance on 24 Feb 2022, 02:17PM GMT. RUB=X 86.1610 4.6676 5.7276 : USD/RUB — Yahoo Finance

USD/RUB FX rate, accessed Yahoo Finance on 24 Feb 2022, 02:26PM GMT. RUB=X 86.1610 4.6676 5.7276 : USD/RUB — Yahoo Finance

Cryptocurrency is here to stay. And whether you like it or not it is a tool that will be used for both good and evil.

The people who continue to call cryptocurrency a Ponzi scheme are missing the forest for the trees.

The topic may be sensitive but someone needs to explore it and study its implications. I hope someone will read this and do more investigation into how cryptocurrency is being used as a tool in war.

To help Ukraine, please check out Jared A. Brock's very helpful article here: Here Are 35+ Ways You Can Help Ukraine Right Now

[25 Feb 2022 First Update]

Bitcoin donations to an NGO providing support to the Ukrainian military have increased over the past day. Source: Bitcoin donations to Ukrainian military soar as Russia invades (cnbc.com).
Despite being accused of being a pathetic loser making use of a difficult situation to peddle Bitcoin (in the comments section), the author does not own any at the time of writing. See my written response here.

Writing About Bitcoin Is Like Writing about Politics or Ideology

Someone is bound to disagree with you and call you names.

blog.cryptostars.is

[25 Feb 2022 Second Update]

Bitcoin donations have totaled $1M USD. Source: Bitcoin donations for Ukrainian military surpass $1M (forkast.news).

[26 Feb 2022 Update]

Bitcoin donations are growing fast and have surpassed $4M USD. Source: Ukraine Military Bitcoin Donations Surge to Over $4 Million — Decrypt
However, if the Internet connection goes down, then cryptocurrency will not be of any use. Source: Ukrainians Are Preparing to Lose Internet Access — Crypto Briefing

[27 Feb 2022 Update]

Over $12.2M USD in cryptocurrency has been donated to support Ukraine. Source: Live Updates: Ukraine Government Turns to Crypto to Crowdfund Millions of Dollars (elliptic.co)
Elon Musk has activated Starlink to keep Ukraine connected to the Internet. Musk says Starlink active in Ukraine as Russian invasion disrupts internet | Reuters

[28 Feb 2022 Update]

The Ukrainian government has been soliciting for crypto-donations directly and has raised over $13m USD worth in cryptocurrency. Source: Ukraine raises $13 mln in crypto after crowdfunding appeal | Reuters
The donated cryptocurrency has started to be spent to purchase critical supplies. Source: Coindesk.com Ukraine Government Is Using Crypto Aid to Purchase Critical Supplies
For more information, see this external link for further updates: Live Updates: Ukraine Government Turns to Crypto to Crowdfund Millions of Dollars (elliptic.co)
The situation has been evolving quickly fast and I have written another opinion piece to highlight the role of cryptocurrency in the war:

If You Want to Ban Crypto, You Are Standing Against Ukraine’s Freedom

The government of Ukraine is openly soliciting crypto-donations via social media.

medium.com

[1 March 2022 Update]

Someone has made the counter argument that it is not possible for Russia to circumvent SWIFT ban through cryptocurrency. Source: Ripple clarifies role of XRP and Crypto amid Russia ban from SWIFT — FinanceFeeds
Bitcoin is trading at a premium in Russia. Source: Russian Crypto Buyers Face Whopping Premiums Amid Economic Crash (cryptonews.com)

[3 March 2022 Update]

Cryptocurrency donations to Ukrainian NGOs and the Ukrainian government have reached $34M. Source: Live updates: Ukraine gets $34M in cryptocurrency donations | AP News

The author writes mainly on Japan, work, culture, society, and cryptocurrency. Read more about his writing on Bitcoin and cryptocurrency, or discover his most-read stories here.

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