The Russian-Ukrainian conflict took charge over the past weeks, where the Russian Federation shifted its focus towards invading Ukraine and setting up a prospected change of diplomatic and global preferences throughout the West and East. As a result of the invasion, public-rated devastation was reported on a large scale. However, along with the conspiracies that followed this major global change of events, several countries proceeded towards economic sanctions on the Russian Federation, which is believed to bring economic disparity across the country’s financial system.
Understanding the use of sanctions as a tool to put a stop to Russia’s invasion, there were speculations over the use of cryptocurrency as a way out to the existing financial crunch Russia is believed to face as a result of these sanctions. The crypto community had different plans otherwise. Seeing how the world reacted to the Russian invasion of Ukraine, crypto became the source of inclusivity across the Ukrainian people. Where funds and aids were believed to be targeted through appropriate channels, cryptocurrency introduced itself as a prospective source of supporting the Ukrainian country amidst the invasion. They have been quite thankful to the crypto community for this, and many people have been raising a voice over the narrative taken by this digital ecosystem in a time that requires global support.
Seeing how the community responded to the call for crypto aids, it is important to observe the initiation of this trend across the digital ecosystem. On the eve of the 26th of February, the Ukrainian government tweeted the official Bitcoin, Ethereum, and Tether addresses as a call for standing with the oppressed. This turned out to be quite fruitful, as a large sum of donations from the individual level were observed across the crypto ecosystem. A total sum of over $54 million in donations was observed amidst this call, all within a week of the turmoil that originated across the region.
Global analysts have been quite skeptical over the donations made through this digital channel, where they regarded it to be a ‘peanut’ as compared to how the proper sources of donations can be utilized for countering the unrest within the region. This, however, has not been promoted as a general opinion on a bigger scale.
Another significant factor that is believed to be highlighted with the inclusion of digital forms of donations was the concept of decentralization throughout blockchain technology. As it is believed that the traditional sources of donations would be halted to reach the Ukrainian citizens, cryptocurrency came out to be the savior of the presumptuous concern. As it introduced the idea of a public distributed ledger on a scale that would bring bigger and better investment opportunities, the turn of events can prove to be quite decisive for the wide-scale adoption of cryptocurrency as a financial system.
Ukraine has been quite inclusive with Bitcoin and cryptocurrency, as it is believed to be among the pioneers that appreciated the change across the community through this digital temptation. Although cryptocurrency was believed to be a haven to the rising black market and terror financing, this potentially will bring a change within the viewpoints of the community as a whole. It showed that this could become a potential tool within wars to fight with, giving a completely new direction to what is believed to be a dominating market in the future.
Analysts, however, have two different viewpoints pertaining to the direction taken by cryptocurrency in providing relief funds, aid, and military benefits to the Ukrainian community. It is believed that where Russia is being sanctioned for having no economic ties with major strategic countries across the world, the country would take up the decentralized narrative to its advantage. As cryptocurrency cannot be controlled, it is believed that cryptocurrency would be a haven to lead them towards digital supremacy and nullify the sanctions that are being imposed on them.
This concept has no groundbreaking arguments to this date. Cryptocurrency is a very small market, as compared to the global market that exists within the current world. The donations observed across cryptos rose over $54 million in the count, which can never counter the vast range of sanctions imposed onto Russia and Putin. To take as an example, the US is believed to sanction Russia for consuming $630 billion in foreign reserves, which is a huge number as compared to the existing situation of the crypto community. A worldwide ecosystem that holds a total of $2 trillion in the market cap cannot be a platform that can help countries like Russia make economic benefits through it.
Quoting Asheesh Birla, “There simply isn’t enough global liquidity to support Russia’s needs (the country’s FX needs, not individuals). Even if you were sending ~$200K every minute & assuming the BTC/RUB market was resilient enough to immediately replenish the liquidity (very doubtful), you’re nowhere near $50B / day. Also, the total average daily volume over the last month for BTC/RUB has been just ~$11M”. On the other hand, “SWIFT is one part of the equation here – banning some Russian banks from using SWIFT does complicate matters, but let’s not forget that Russia has had ample time to prepare, setting up direct banking relationships in Asia and elsewhere to get around correspondents.”
Talking more about the donations to the Ukrainian citizens, there has been another innovative direction taken by this digital solution. Users were seen donating their assets in the form of NFTs, which comprise over $6 million of NFTs in value. The Ukrainian authorities have managed the donations carefully, with a website displaying the counter with all the donations that have been made to the country.
Looking into the individuals that have been a part of this donation drive, several notable names were seen announcing their part through this digital financial solution. The inventors and founders of projects such as Polkadot (DOT), TRON, and several DAO projects have announced notable contributions in this venture. The UkraineDAO is another initiative that is a collective initiative of PleasrDAO, Pussy Riot, and Trippy Labs. Seeing such development at such vast levels, the contributions presented by the crypto community would bring it to the positive attention of the global market. The world shall be observing a transition of digital finances on a broad scale very soon. The adoption of cryptocurrency in the war shows that it is not only a tool to give support to the damaged, but it also expresses itself as a source for buying critical supplies for the people surviving in the region.
Crypto has been helping Ukraine; however, it has no certain and viable solutions for the economic sanctions imposed on Russia. The power of cryptocurrency is yet to be tested, which would be followed up according to the conditions that would unfold across the region under unrest.