In times of war, crypto is the currency to beat

While the crypto market has been topsy turvy over the last few months, it's now highly in demand on the battlefield, especially in the Ukrainian crisis.
2 March 2022

(Photo by Ishara S. KODIKARA / AFP)

While the crypto market has been topsy turvy over the last few months, it is now becoming highly in demand on the battlefield. In a series of tweets, the Ukrainian government requested donations in crypto from investors globally. The tweets listed online wallet addresses for Bitcoin, Ether, and Tether, which are the three most popular cryptocurrencies at this point in time.

And surprisingly enough, the world responded. Since the tweets came out, Ukraine has collected more than US$33.1 million worth of digital assets as of the 1st of March. The crypto funds were provided to the Ukrainian government as well as NGOs supporting the country’s military.

According to a report by Elliptic, the majority of donations received to date have been in Bitcoin and Ether, although US dollar stablecoins contribute a significant proportion. But it’s not only crypto assets that are being donated, people are also sending NFTs to the Ukrainian government’s Ethereum account.

Elliptic also reported that some of the crypto fundraising campaigns are happening outside of Ukraine. For example, UkraineDAO is a decentralized autonomous organization, which aims to raise Ether to be donated to Come Back Alive. Come Back Alive is a Kyiv organization that raises funds to arm and train military personnel in Ukraine.

At the same time, scammers also appear to be taking advantage of the current situation by tricking unsuspecting users wishing to donate to Ukrainian causes. Elliptic has identified a number of fraudulent crypto fundraising scams which are exploiting the current situation.

Meanwhile, cryptocurrency exchange platform Bitfinex told TechHQ the surge in bitcoin price over recent days has once again shone the spotlight on its unique properties.

“As the horrific events in Ukraine and Russia are still being processed by financial markets, the world at large, and the digital token economy, bitcoin is once again exhibiting resilience. In these perilous and uncertain times, bitcoin is not capitulating as many of its detractors had predicted,” claimed Bitfiniex. “In fact, we may be witnessing the world’s first major conflict in the age of cryptocurrency, and this is proving to be a great test case to see how bitcoin performs.”

Crypto funded conflict?

With crypto being the preferred currency for the conflict in Ukraine, Russia is also ensuring they are making the most out of it. The country is after all the world’s third-largest bitcoin miner.

As the world hits Russia with heavy sanctions, there are concerns that Russia would use crypto to circumvent sanctions and move money undetected. The digital ruble could prove to be an answer for Russia in the conflict as it will enable transactions to still go on. Reports show that the introduction of a digital ruble would eventually curtail the dollar’s influence and potentially dull the blog of sanctions from the West.

At the same time, Chainanalysis recently reported that 74% of global ransomware revenue, which is more than US$ 400 million worth of cryptocurrency ended up in Russia. For example, the Federation Tower in Russia is home to several cryptocurrency businesses that have facilitated extensive money laundering, accepting funds from addresses involved in various forms of cryptocurrency-based crime — especially scams, darknet markets, and ransomware.

As such, the Financial Times reports that crypto exchanges are coming under pressure to block transactions with Russia. The use of cryptocurrencies provides a back door to move money around the world while they seek to shut Russia out of the global financial system. There have been concerns that Russian accounts are stashing funds in crypto or moving wealth overseas.

With that said, crypto may be the currency that funds Ukraine’s defense against Russian forces. But it also could be the currency that saves Russia from global sanctions and keep them on the go. Whatever the outcome may be, there is no denying that cryptocurrencies are becoming the game-changer in the conflict.