Russia-Ukraine War: The Role and Impact of Crypto Assets
Russia-Ukraine War: The Role and Impact of Crypto Assets
Time comes to March 3, 2022, the war between Russia and Ukraine, which has entered its eighth day. As opposed to the clarity of the war itself, before and after the start of this war, numerous factors have joined it, playing different roles and playing different roles, and these people and events have attracted people's attention more than the war itself. Russia-Ukraine War: The Role and Impact of Crypto Assets
Crypto assets are also inevitably involved in the Russia-Ukraine war. Russia and Ukraine, Europe, America and other countries as well as the crypto market itself form a triangular game, and this game is not only a tangible financial war, but also an invisible war of ideas. This game and debate may bring something different to the subsequent world financial and economic system; and for the crypto market itself, it may be a turning point or even a starting point, just like the new generation of mammals, which started to come out of their own evolutionary path and completely changed the face of the whole biosphere.
As the world becomes more and more flattened and "global village", the whole world becomes a "spider web" of animals, rain and dust, just as the materialist concept of development says: the whole world is a universally connected organic whole. When a butterfly stirs its wings, a hurricane starts, and then in turn affects the butterfly itself.
"The world's first crypto war".
What role will crypto assets play?
Before the war between Russia and Ukraine, crypto assets had already become a tool for Russia and Ukraine to play against each other, for example, Ukraine announced the legalization of crypto assets, while Russia restricted crypto assets to prevent the outflow of assets, etc. After the war officially started, crypto assets became deeply involved in it, whether as an emerging war crowdfunding tool, a means of sanctions and counter-sanctions or as a risk-averse option, crypto assets and crypto market participants have been actively or passively involved in this war. The Washington Post even described the Russia-Ukraine war as "the world's first crypto war".
On the third day of the war between Russia and Ukraine, February 26, the Ukrainian government announced via its official Twitter feed that it was accepting donations of crypto assets including BTC, ETH, USDT and others, and has raised over $35 million in crypto assets to date.
Screenshot of the Ukrainian government announcing the acceptance of donations of crypto assets via official Twitter
In addition, many project parties and practitioners in the crypto market have started to provide support for Ukraine, for example, Vitalik Buterin, founder of Ether, called for support for Ukrainian locals through UkraineDAO on social media; Sun Yuchen, founder of Wavefield, announced a donation of $200,000 for Ukraine, etc.
It can be said that crypto-assets have in fact become a powerful emerging crowdfunding tool for war because of their inherent globalization properties. This attribute of crypto assets will be gradually developed in depth in this war, and if there is another war in the future, crypto assets will only be more deeply involved.
As for whether this "crowdfunding tool" will become an "executioner" to kill people or a sword to uphold justice, it depends on how people use it, "It is never the gun that kills, but the person who pulls the trigger.
Another role played by crypto assets is to be used as a means of sanctions and counter-sanctions by various parties. For example, U.S. sanctions against Russia have spread to the crypto sector: the U.S. Treasury Department has issued new regulations on March 1 that prohibit Americans from providing any support to Russian oligarchs and entities, including through the use of crypto assets for transactions; at the same time, Russian citizens and entities are prohibited from using crypto asset trading platforms to achieve any trading practices, a move that could hit the already lame real economy and relatively fragile financial system of the Russian side thus achieving the purpose of sanctions.
The Ukrainian side was even more aggressive, sending official letters to some trading platforms asking them to stop providing services to Russian users, citing "fears that crypto assets are being used to evade sanctions. Meanwhile, ECB President Lagarde called on lawmakers to approve a regulatory framework for crypto, noting that it would prevent Russia from bypassing economic sanctions.
So can Russia escape sanctions through crypto assets? Factually speaking, it is more difficult, and while crypto assets such as Bitcoin do help funds bypass the banking system and move more easily around the world, using crypto assets to move money across borders on a large scale is not currently realistic. And the fact that each transaction is stored on a blockchain that can be read by anyone and cannot be tampered with makes it easier to track, so that transactions from "sanctioned entities" can be identified accordingly.
Of course, the road is not completely blocked and Russia still has the opportunity to evade sanctions using a variety of crypto asset-related tools, but the key is to find ways to transact without using the U.S. dollar. Moreover, the transparency of crypto-assets is built on the blockchain, and Russia could develop new tools to help hide transaction records and thus evade sanctions to some extent.
Being used as a safe-haven option is the third role crypto assets are playing in this war, but this option is more for the citizens of Russia and Ukraine, as the crypto market is still relatively small in volume to act as a medium of exchange between officials or organizations on a large scale, but it is more reliable as a safe-haven option for some people.
In fact, since the war between Russia and Ukraine began, bitcoin transactions using rubles have soared to the highest level since last May, while transactions using Ukrainian hryvnia coins have climbed to the highest level since last October, according to crypto data firm Kaiko. And a Russian government report estimates that there are more than 12 million crypto asset wallets opened by Russian citizens, involving funds totaling about 2 trillion rubles.
On the same day that the U.S. Treasury Department issued new regulations on sanctions, bitcoin prices pulled up in the short term, spiking directly from around $41,800 to near $44,000, a 24-hour gain of more than 14%; this may be the result of risk aversion guided by a short period of heavy buying by Russian citizens.
The Russia-Ukraine war is the largest European military conflict since World War II, and crypto-assets represented by Bitcoin are also at the center of it, with both sides discovering the advantages of borderless, permissionless crypto-assets. Just as the internet has evolved into an important part of warfare, the war between Russia and Ukraine may be "the world's first crypto asset war," but it will definitely not be the last.
The Battle of Crypto Market Ideas.
What is the "spirit of encryption"?
At a time when the entire crypto industry is caught up in the Russia-Ukraine war, both the industry players and the crypto assets themselves are actively or passively shining their light on the battle between regulation and regulated, sanctions and counter-sanctions, support and opposition, and the battle of ideas in the crypto market is also on the table. It can be said that the decision of crypto projects under the Russia-Ukraine conflict, and whether crypto assets can be truly decentralized in the future? These debates may have a very important impact on the future development of the crypto industry, and even the basic face and direction of the industry.
To be realistic, the crypto industry in general is currently pro-Western ideology, so the whole crypto industry is almost lopsidedly supporting Ukraine. Numerous crypto projects and individuals have shown their attitude and donated crypto assets to Ukraine, as V-God, the founder of Ether, said: Ether is neutral, but he is not.
And after the U.S. came out with a policy and demanded that some crypto firms comply with its request to ban transactions with Russian addresses, most chose to comply: if the sanctions were extended to individual citizens, then they would comply.
This move has sparked a huge controversy in the crypto community: if crypto companies are forced to "politically" take sides and freeze users' accounts, will there be any privacy in crypto transactions? What is the point of "decentralization" of crypto assets?
On the other hand, countries such as Ukraine have also called on crypto businesses to take sides, calling on them to freeze the accounts of Russian users to avoid Russia using crypto assets to evade sanctions. Ukraine's homegrown gaming NFT trading platform DMarket has also announced that it is freezing the accounts of Russian and Belarusian users, which means that the assets of these account owners cannot be withdrawn. Following the announcement, DMarket was plunged into controversy, with many even calling it "theft" and accusing it of going against the spirit of decentralization and hurting innocent users.
Of course, there are also many crypto companies that have stated that they will not impose sanctions on ordinary users. However, as the war between Russia and Ukraine continues, the crypto industry will be more and more involved, and will face more and more pressure from all sides, and crypto companies that claim to promote "decentralization" will really face the test of values. It can be said that when the crypto industry wants to enjoy the protection brought by regulation, it is bound to face such controversies as well.
For now, a number of users in the crypto community believe that the purpose of the crypto economy is decentralization and openness, not privilege and tyranny, and that even in the current exceptional circumstances, crypto entities should follow this principle as much as possible, and that "all crypto businesses have a responsibility to defend the economic freedom of the people, not to be a weapon of oppression against innocent people. "
As the Cryptopunk Group, the place where Bitcoin originated, believes: criminals and terrorists would rather be allowed to develop and use strong encryption systems, which carry some risk, but that is what must be endured to defend personal privacy.
However, as more and more people, more and more stakeholders join the crypto industry, the original idea of the crypto industry will be increasingly dismantled. We want more and more people to join the crypto world, but as more and more people join, it becomes more and more difficult to ensure that the original idea is recognized and implemented, which is an insurmountable paradox.
With the butterfly effect, the
Where will the crypto market go in the future?
What will be the impact of crypto assets being caught in the Russia-Ukraine war on the crypto market itself? We can explore both the short-term price and the long-term development.
In terms of short-term sentiment, after the full-blown Russia-Ukraine conflict, crypto asset prices represented by Bitcoin were as generally bearish as the general environment and plummeted. However, a rapid rebound followed due to risk aversion, sanctions and counter-sanctions, and Bitcoin topped $45,000 in one fell swoop.
And according to Glassnode, the number of non-zero Bitcoin addresses has surpassed 40 million in 2022, a new all-time high. From this data, it seems that bitcoin is once again playing the role of "digital gold" and will rise against the tide, just as it did during the turmoil in Turkey and the Cyprus crisis.
However, stereotypical empiricism will undoubtedly kill people. As we all know, the main reason for this round of bitcoin and crypto market is because of the influence of the epidemic leading to a big release of water by the central bank led by the Federal Reserve. At present, the Fed's rate hike to collect water is imminent, and the impact of this general environment on the rise and fall of the crypto market will be more important than the black swan event of the Russia-Ukraine war, unless the Russia-Ukraine war is fully expanded and appears out of control.
To learn more about the impact of the Fed rate hike, check out the Euromonitor article atThe Federal Reserve Rate Hike (I): Will the Rate Hike End the Bull Market?.
From the perspective of U.S. stocks, historical data show that the geopolitical conflict erupted on the day, U.S. stocks generally fell in the short term, the impact of the interval of 10-30 days, after the rapid occurrence of repair. The current Russia-Ukraine conflict has lasted for 8 days, and with reference to the past pattern, the conflict may still have some impact on the U.S. stocks in the next three weeks. Then, according to the depth of the impact of U.S. stocks on the crypto market now, we also need to pay attention to the specific market trend in the next three weeks and do a good job of risk control.
In the long run, the Russian-Ukrainian war may rewrite or accelerate the course of the crypto industry's history to some extent.
Through the Russia-Ukraine war, crypto assets can be said to have really come to the center of the world financial stage and started to really have a wide impact on the financial world. Under this influence, both Russia and Ukraine, as well as Europe and the US and other countries are playing various games around crypto assets.
Russia and Ukraine, one is circumventing sanctions and the other is collecting donations, while Europe and the US are looking at ways to avoid making crypto assets a tool for Russia to evade sanctions. All these moves are seen by the world, then the next step will be for more countries and more institutions to reflect, and even follow suit and innovate. The benefits that crypto assets bring are obvious, and with enough volume, is it possible to build another system outside of the traditional financial system, or at least a very important addition to it.
This Russian-Ukrainian war has led to the "perfect narrative" for crypto assets represented by Bitcoin: traditional financial value transfer facilities are crippled, assets are frozen by centralized institutions, and capital controls ...... cater to the original narrative of Bitcoin or blockchain The narrative is that of a permissionless, decentralized value transfer network.
Especially in a war environment, when sovereign countries themselves are facing threats, fiat currencies that rely on sovereign credit are hardly immune, and super-sovereign hard currencies are a lifesaver, which used to seem to be only gold, but now there is one more option. The Russian-Ukrainian war, which has brought crypto assets completely out of the loop, will bring more and more people and money into the picture in the future, which will undoubtedly greatly accelerate the overall development of the crypto industry.
In conclusion, realistically speaking, the role and the role played by crypto assets in this Russian-Ukrainian war remains a supporting and secondary role, with traditional financial markets still dominating. Yet just like the mammals of the new generation, which gradually rose to dominate the entire Earth's biosphere in their tenacious fight against the descendants of the dinosaurs, an upright walking species then emerged from the primate population and revolutionized the entire biosphere.
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