Crypto in a time War: Is this the time to prove its capability?
For almost 2 years, the world stands united together to fight a global pandemic that is affecting millions of people but who would have thought that as soon as the battle with the pandemic is over, some of these countries would go to war with themselves. Unfortunately, cryptocurrency has has been in the spotlight lately for its contributions during the war and although some take advantage of it for the wrong reasons, there are others who use it to support the unfortunate ones. So let’s examine the events involving crypto in the Russia — Ukraine war and examine is this a true test of crypto capabilities?
Crypto in a time of War
It is really quite strange to think that in this generation where there are enormous peace talks and organizations that there is still a war going on between 2 major countries. It has obviously entered day 74 since Russia invaded Ukraine and it still has not come to a fruitful solution despite the resistance from the EU and other regions. Unfortunately this is also the first time since the internet tested the good and the dark side of blockchain technology.
In times of war, there is a need for privacy and protection of wealth from the current traditional economic turmoil for the citizens of both the countries and cryptocurrency presented itself as the perfect leeway for this problem. This is obviously not the first time that cryptocurrency was used in war as we can see from the example in Afghanistan where thousands of Afghans seek refuge in cryptocurrency in order to protect their living standard.
Prelude to the war, Russia has been one of the leaders in the crypto space behind the USA in both the mining and trading sector. With the amount of users in the country reaching 17.3 Million users and a total holdings estimated at 10 Trillion Rubles ($130 Billion), this number is enough for Russia to be in the top 5 globally. Despite the resistance earlier this year from the Russian central banks while President Vladimir Putin aiming to regulate the space then follow China’s steps of an outright ban.
This obviously proved vital considering the Russian economy is entering recession currently as GDP projections for the years slumped to -7.2% and the economy expected to contract by more than 11% despite the massive recovery last year. This would also look to benefit Russia’s economy who is currently facing numerous sanctions from the EU including travel bans and asset freezes for the members and related parties of the parliament plus import and export restrictions on Russian related goods.
Crypto obviously provides some sort of an alternative to these sanctions as some of the articles out there that Russia are considering other forms of payment for oil and gas exports including cryptocurrency from friendly countries. This move would eventually benefit considering Russia is the biggest exporter of gas and this was obviously met with disagreements from Ukraine, US and European politicians which urges cryptocurrency platforms to ban all Russian users. Unfortunately this move will affect not only the Russian oligarchs but also the common Russians who are seeking refuge in cryptocurrency from their devaluing currency.
We obviously see a different story with Cryptocurrency in Ukraine which has received enormous support worldwide to survive during these tough times. Ukraine has seen its economy projection contract by more than 45% this year and the blow could be much worse the longer the war continues. Ukraine recently signed a bill to legalize cryptocurrency use within the country and it has come at the right time as worldwide support from crypto enthusiasts has started pouring on.
Ukraine has a tech native population with a huge startup environment so even before the law was passed, the country was slowly rising to the top with more than 12% of its 42 Million People being crypto users. Ever since the War began, the donations from crypto space worldwide reaching to about $100 Million Worldwide has been used to support humanitarian purpose such as relocation to other countries for refugees and aid for the armies to support the country’s defense. (Source: Coindesk.com)
With the law legalized, it also allows Kuna, Ukraine’s largest crypto exchange with its partnership with FTX to help convert the crypto donations to much-needed fiat for daily operations. It also has allowed refugees currently in Ukraine or relocating to other countries such as Poland to protect their wealth and survive during these times of war.
It has been one of a kind of supporting action that has ever happened in the crypto space worldwide and crypto played a major role in ensuring Ukrainians continue to receive help.
Is this a true test for its capabilities?
Crypto as mentioned before has gone through a lot of phases for 13 years since its inception from being dubbed the replacement to the fiat money as a payment method to being used as a tool for speculation. Of course with the worldwide acceptance of cryptocurrency it has finally established itself as a tradeable asset and to some certain extent a payment method in some countries or institutions. It has obviously never been used in such a massive scale of conflict such as in Afghanistan or recently in the Ukraine and Russia War.
Cryptocurrency with its peer-to-peer decentralized technology is a revolution to the traditional finance space but just like every revolutionary invention, it could be used for the good or the bad. Although some people use the crypto space to scam, speculate and influence the market, there are other people in the space who are using it to channel their support to other people in a more efficient and faster way.
Yes crypto has been pushed to the limit of its capabilities in these times of conflict but there are other challenges that have to be faced by the space as it grows over time. There is always an argument about centralized vs decentralized but at the time of war, we sure agree that centralized exchanger played a key role in ensuring that only the right people are allowed to use this technology while procedures like KYC/ AML process made sure that the other people are denied entry. As the cryptocurrency space expands, this event will also be a basis for the current and future regulations that will guide this space towards being an efficient and safe payment method.
We in Nagaya Technologies Pte. Ltd surely hope that these conflicts can be resolved in a peaceful manner and our prayers go to everybody who is directly or indirectly affected by it. To know more about how our coin Nagaya can provide benefits to you, you can read our whitepaper at nagaya.io.
Or talk to us at t.me/nagayaofficial