Since the Russia-Ukraine war has broken out, blockchain and cryptocurrencies took a central stage as a medium of unrestricted transactions in both Russia and Ukraine. Due to the unregulated mode of functioning cryptocurrencies are becoming a key contributor to the attempts for an economic revival in the region.
The war between these two nations has led to the loss of hundreds of innocent lives, causing a drastic fall in financial systems. War demands immense money and destroys valuable human resources, both being crucial to the global economy. However, blockchain is helping both of them to rise against the odds.
In the article ahead we will dive into multiple points of view to understand how blockchain and cryptocurrencies are emerging as viable solutions to overcome the economic catastrophe in Russia and Ukraine. We will also try to understand how Russia is leveraging cryptocurrencies to evade the USA-enforced global economic sanctions.
War Between Ukraine and Russia
The Russia -Ukraine war has catapulted the economy of the two countries by causing massive destruction in the upper Baltic region. Russia attacked Ukraine on the 24th of February, 2022 but the invasion is still going on with no sign of peace. Ukraine's army and the citizens are continuously facing direct threats from the Russian troops, which in effect is leading to worsening the economy in the entire region. On the other hand, the sanctions enforced on Russia by the USA have devasted its economy with its national currency Rubel falling more than 50%.
Russia started the war to depose the current Ukrainian government and win the capital Kyiv. But soon enough, Russia reverted its troops from Kyiv to liberate Ukraine's eastern regions namely Luhansk and Donetsk, collectively called Donbas.
These regions, which Russia considers its part, are merged with the Russian border in the east of Ukraine. Russia blamed Ukraine for treating its citizens in these regions brutally, thus justifying its decision to denazify and De-militarise Ukraine.
The war is still ongoing, and it does not seem to come to an end by the negotiation any time soon. With the count of casualties in the clashes crossing 3000, this war demands global reflection of policies and changing its leaders from western warcraft sellers to new emerging powers.
Blockchain is a decentralized ledger of transactions that no single authority governs and that is spread all over the world within millions of anonymous computers. Blockchain technology has transformed the course of global transactions. A public ledger where everything is recorded but with complete anonymity is prominent to replace the traditional centralized financial, medical, business, and industries model.
This war between Russia and Ukraine is being fought in an unprecedented digital era. Both countries have accepted the new normals in this time of war and getting help digitally from across the borders.
On one hand, Russia is trying to use the blockchain to evade the sanctions forced by the USA and its allied nations to regain the devastating financial and economic crisis within the country due to the impacts of war. These economic sanctions are the complete cessation of businesses, products, and services of the enemy countries. The USA has applied these sanctions even before to countries that are not in alignment with its POV. Moreover, it restricts its citizens and applies a penalty if they use any products from the sanctioned nations.
While on the other hand, Ukraine is using the blockchain to collect funds from around the world for the people facing the wrath of war. Artists and celebrities from different corners of the world are helping Ukraine anonymously by donating NFTs and cryptocurrencies in millions.
Blockchain, as we discussed, is the power fuel for both countries in these critical times. For Russia, it is a way to re-center the global market by increasing the supply of Russian oil which was hindered by the sanctions applied by America and other western countries.
While Ukraine is finding new ways to stand and fight against Russia to safeguard its existence. For this, Ukraine is utilizing blockchain as a tool to gain support and humanitarian aid from various countries.
The blockchain is an unauthorized solution for Russia to get rid of the sanctions as it is designed to be decentralized by its very nature. But is blockchain and crypto useful for Russia only because they are decentralized?
Below are some points that show how a decentralized expansion of businesses can help Russia bypass the global sanctions.
Cryptocurrency and blockchain are the havens for Russia to expand its businesses globally without the permission of the central bodies that are located in western countries.
Blockchain enables Russia to make international transactions without going through the banking systems which are government regulated across the world.
Russia can also connect industrially with other US-sanctioned countries like Iran and Venezuela to expand its businesses.
In the Russia-Ukraine war, Ukraine has collected sizable aid in cryptocurrencies and NFTs from all around the world. From the start of the war, Ukraine has announced that it will be accepting cryptocurrencies and NFTs as funds.
Ukraine has also auctioned most of the received NFTs in an online auction to fund their war efforts. The collected fund was divided into two major portions, one for humanitarian purpose such as food and people's residence, and the second one used to resist the Russian invasion.
The National Security Council suggests crypto is not a proficient way to bypass the sanctions. As the usage of cryptocurrency and blockchain seems clear and concrete, in practice, it may go through some barriers that can affect the entire trade.
Thus, It can be difficult for Russia to go through the sanctions as some of the risks such as cyber security, marketplace fraud, and non-liquidity of assets are involved in the trade.
Blockchain is a public ledger that is comprised of all the transactional history and public account details. Cryptocurrencies like Bitcoin and the majority of altcoins leave some footsteps over the chain that can be traced back.
Law enforcement agencies can trace back and find any corrupt use of cryptocurrency on the blockchain. Even though it is not easy, this can possibly lead to the identification of the person or the entity involved. Many crypto exchanges in use are centralized, which means they are regulated by country laws, hold users’ private keys, and require the KYC to open an account.
As we know, government policies regulate many cryptocurrency exchanges, making it difficult for users to hide their identities. Trading on such platforms is not possible to bypass the sanctions and expand industry-level businesses. However, this might not affect a country as powerful as Russia which has a lot of other methods of getting things done.
The Economy of Russia and Ukraine has fallen drastically due to a forceful invasion from Russia. Both countries have fallen to their economic bottoms and have lost hundreds of lives which are to be noted on historical fronts. The economic breakdown led them to find new ways to seek help and expand their businesses.
Blockchain and cryptocurrencies are the solutions, but they also involve risks that can not be ignored. Russia is implementing blockchain to escape the sanctions and, on the other hand, Ukraine is seeking help in terms of NFTs and cryptocurrencies. The war has been impacting countries, the world geographically, and the economy of the countries involved in the conflict. However, no matter what peace must sustain in the region to ensure economic safety for the entire world.