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Bitcoin and war – What did the Russian invasion show us?

Bitcoin and war – What did the Russian invasion show us

The current geopolitical climate is far from ideal. With the Russian forces still occupying Ukraine, the situation does not seem to be improving. However, there are many things one can learn from the events of the past weeks with regards to Bitcoin and cryptocurrencies and their potential role in the future of finance and the economy.

Yet, before we dig more into this, let us state that we stand with Ukraine. The horrific atrocities that are taking place in the country should be stopped, and we hope that a peaceful resolution will come as soon as possible so that the ordinary people do not have to suffer and fight for their lives.

Bitcoin and the Russian invasion

However, the situation that is taking place in Ukraine pointed out one of the most significant characteristics of Bitcoin – its neutrality. The biggest cryptocurrency, created by the mysterious Satoshi Nakamoto, does not have any CEO, management team, or organization running behind it.

Since its inception, Bitcoin has created a huge network of people all around the world that lets anyone join and use the benefits of the biggest cryptocurrency. What benefits are there, you may ask? Looking at the geopolitical conflict taking place in the eastern part of Europe, one can find at least a few different use cases where Bitcoin can and is already helping.

Ukraine crypto donations and easy transportability

For instance, the most prominent cryptocurrency was used for donations to Ukraine. So far, around 20 million dollars was donated to Ukraine in Bitcoin, with the overall number of crypto-donations being almost at 60 million dollars. This was done with exceptional speed, low fees, and transparency. The government of Ukraine itself has posted its crypto addresses for Bitcoin, Ethereum, and Tether, and later included a Polkadot address as well, which can be used by anyone to help those in need.

Moreover, the power of Bitcoin can also be shown due to its simple transportability. Not only was it easy and fast to send money to support people in Ukraine, which is something that you cannot do, for instance, with gold, but it is also easy to transport your wealth in the form of Bitcoin from the country. Traveling with hundreds of thousands or even millions just in the form of paper fiat money, gold, jewelry can be dangerous and subject to confiscation.

Crypto assets donated to the ukrainian government and NGOs

Cryptoassets donated to the Ukrainian government and NGOs. Source: elliptic.co

However, with Bitcoin, all you need is to remember your seed. Seed is usually 12 or 24 words that are your key to your bitcoin or cryptocurrency wallet, where your crypto is stored. Thus, you do not need any device or any physical form of this. All you need is to remember the 12 or 24 words in the exact order of your unique wallet, and you can cross the borders without any fear of losing your wealth. To recover your wealth, all you would need to do is simply find a device or software to enter your seed (12 or 24 words) and then do whatever you want with your money.

Can Russia avoid sanctions through crypto?

On the other side, some people believe that Russia can use Bitcoin and crypto as such to mitigate the effects of the sanctions imposed by the USA, EU, or other countries. While this seems possible in theory, in practice, cryptocurrency markets are so small and so transparent that they would not be of any help to Russia.

However, this form of digital assets or currencies can be helpful not to Russia as such but to ordinary citizens of the country. These people, who are hardly responsible for anything that is going on with the invasion and are even protesting heavily against it in cities such as Moscow or St. Peterborough, are affected by these sanctions as well.

With the value of the Russian ruble falling, the country’s people might want to look for alternative investments and assets where they can protect their wealth and not see it all disappear. With sanctions such as the banning of SWIFT, Russian people are in a challenging position to choose from the assets that they are capable of buying. And Bitcoin, alongside other cryptocurrencies, is still open to anyone.

While some politicians are asking for stricter restrictions on cryptocurrencies or swifter and more thorough actions by cryptocurrency exchanges, these assets continue working without any problems. This, especially in the case of Bitcoin, points out one of its most significant characteristics.

Bitcoin’s neutrality

Bitcoin does not differentiate between Russia and Ukraine. Bitcoin does not distinguish between the donations sent to support Ukraine or the transactions sent out of Russia. Bitcoin simply continues working, block after block, without choosing any political side or restricting people from its global neutral settlement network.

Bitcoin has thus yet again shown that it is not only censorship-resistant since no government or sanctions can affect the functionality of Bitcoin but also proved that it is here just to serve the needs of those who require it. Those who need to protect their wealth, move it across borders, or save it from inflation, collapsing fiat currency, or malfunctioning monetary system will find its value no matter what the price of Bitcoin is.

If you want to learn more about Bitcoin or other cryptocurrencies or want to invest in them, we are here to help. Feel free to contact us at any point via this link.

Published: 01. April 2022
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