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Crypto in a Wartime

It has been days after the Russian invasion of Ukraine and huge donations since then have been sent to Ukrainian NGOs or other organizations. Some groups collect donations in the form of crypto such as “Comeback Live”. This group is Founded in 2014 and it is the organization that provides military equipment, military training, and medical supplies. The group began accepting aid in the form of crypto in 2017 and received about $ 200,000 in the second half of 2021. “We created a bitcoin wallet because people were constantly in demand and we want to give everyone a chance to easily support us,” the group told Reuters. There is a question that how crypto is going to work during this war and any other wars? Will crypto save its goals of foundation such as freedom and no need for regulation from banks in wartime? In this article, all of these issues are discussed.

 

Crypto donations

In the Ukraine war, most donations are spent to provide military weapons, and part of donations are spent for refugees. Before the Russian invasion of Ukraine when Russia was preparing for the war, Ukraine had done some giant movements in accepting crypto in the banking system in order to become a crypto center in east Europe. Most of the donations are bitcoin and ether since they are easier to use.

 

Money in world war I

After the countries lost their national resources in world war I the governments had to raise the taxes to afford the war costs. After the first month of world war I, nations put away the gold and focused on fiat. The countries started to print more money and the people’s wealth vanished through these decisions.

 

Crypto in today’s wars

Cryptocurrencies provide unknown transactions without needing the government’s and traditional banking system regulations. Talking about privacy, freedom, and society is different from peace to war. It is not clear yet how the cryptocurrency is going to work and what it will provide for wars when the time comes.

 

Crypto for Russia

As governments around the world use the global financial system to impose sanctions on Russia over its invasion of Ukraine, cryptocurrency is one of Russia’s potential ways to circumvent its consequences. At the same time, digital currencies can play a positive role in helping victims of Russian aggression.

 

Crypto from the good side

After the Ukrainian government launched digital wallets to receive currencies such as Bitcoin and Dodge Coins, donors backed Ukraine through cryptocurrency payments. As of March 9, the Kyiv government and NGOs had received $ 63 million, according to analyst firm Elliptic Enterprises Ltd. Deputy Minister of Digital Transformation of Ukraine Alex Bornyakov told Bloomberg. The ministry is even working on a potential set of NFTs that could raise money for war efforts, he said. Ordinary Russians are also using cryptography as a “lifeline” after Coinbase Global Inc. said.

 

Crypto from the bad side

The danger is that Russian individuals and entities targeted by the sanctions will turn to digital currencies to buy goods and services and invest in assets abroad, and from financial institutions that can track transactions. Digital currencies can be exchanged directly through a peer-to-peer network and a digital ID can be corrupted by the person behind it.

Many users have digital wallets (accounts that store encrypted information), which make it easier to hide among regular transactions. Massachusetts Sen. Elizabeth Warren calls crypto a “shadow world” that Russians and other nationals can use to help “counter-sanction.”

 

cryptocurrencies control their networks

Yes, but monitoring can be fragmented. Platforms used to buy and sell digital currencies require different conditions depending on where they operate. The so-called “know your customer” rules in those countries force banks to issue some form of official identity. Customers receive and specify where their money came from. Other exchanges operate in countries that have not imposed sanctions on Russia, and some do not require accurate customer identification, which makes restrictions more difficult. Some are not even sure how to follow the restrictions.

 

Bottom line

Some proponents of crypto see the war as an opportunity for digital coins to prove their worth as a refuge for ordinary citizens in the face of economic turmoil. But if they ultimately reduce the impact of sanctions, it could add to the pressure for tighter controls on industry.

Governments are now working to crack down on digital tokens used for money laundering. They are also wary of their potential to undermine the effectiveness of everything from capital control to monetary policy. If digital platforms are eventually forced to exercise the rigorous oversight and costly compliance that banks expect, many of the utopia of digital currencies based on “borderless” and “homeless” money may no longer work. “Crypto is difficult to escape from geopolitical realities on earth,” said Lionel Loren of the Bloomberg Opinion.

 

 

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