In the crisis between Russia and Ukraine, cryptocurrency has emerged as a “double-edged blade,” but analysts think it is more likely to benefit citizens on both sides of the conflict than to enable oligarchs and other elites to avoid economic sanctions. The invasion of
The ongoing crisis in Ukraine has prompted Western sanctions against Russian President Vladimir Putin, his associates, and the country’s banking system.
As a result, the Russian ruble has plummeted to all-time lows against the US dollar, putting significant restrictions on where ordinary individuals and the country’s wealthiest oligarchs can transfer and access their money.
During times of conflict, the economies of the countries involved tend to suffer. Aside from the human cost, the economy bears a significant burden. These include property devastation due to bombs, an increase in debt levels to finance the battle, tremendous uncertainty about the country’s future, and a significant opportunity cost (instead of building weapons, that money could have been invested to improve the economy).
On both sides of the border, there has been a bank run ever since the battle began. A bank run occurs when a high number of depositors attempt to take their funds from a bank. To stop the rouble’s freefall, the Russian central bank boosted interest rates to a record high of 20%.
Money tends to migrate towards safe havens like gold in these uncertain times. Bitcoin, on the other hand, appears to be improving. Because it’s impossible to carry gold about and the value of fiat currency is in free fall, it’s much easier to remember your crypto’s private keys. Ukrainian refugees have testified that they have some financial security because they carried cryptocurrencies with them. The Vice President of Ukraine also tweeted about accepting international solidarity in the form of bitcoins, with the crypto community donating over $70 million.
However, cryptocurrency is now operating as a double-edged sword. Although it is a terrific way to receive direct financial assistance, it is also a way to get around the monetary penalties imposed on Russian oligarchs and the Russian government. Cryptocurrency, on the other hand, is politically agnostic and is currently in the spotlight. As the number of addresses holding more than 1,000 Bitcoins has risen, people have begun to stack on Bitcoin. Transaction volumes between bitcoin and roubles have also reached new highs. It means that people are selling their roubles and buying Bitcoins in greater numbers.
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