War has always been an expensive undertaking, no matter which era or decade it has appeared in. Political and military tactics tend to drain a country’s coffers pretty quickly unless they have outside help. This has been true for Ukraine too. The nation is warring with Russia in one of the biggest global conflicts to date. However, this is a war that is being fought in 2022 and therefore, has been a little different from conflicts before it. So, let’s explore more around it with a focus on how the crypto market is influencing and getting influenced by it.
Ukraine War & Crypto
When people think of war, they mostly think about destruction and ruin. If they turn their minds to the economic aspect of it, they may perceive physical aid being sent to the country in question, like food, clothes, cash, and more. The Ukrainian War, however, is being called the world’s first-ever crypto war.
This is because generous benefactors from all over the world have been donating to war relief efforts through cryptocurrency. The innovation happened in March 2022, when Mykhailo Fedorov, Ukraine’s Vice Prime Minister shared details for two crypto wallets on Twitter. He urged people to donate using Bitcoin, Tether, and Ethereum to aid Ukrainian citizens.
People jumped on the chance, sending out millions of dollars worth of cryptocurrency to Ukraine. This worked out well at the time, considering the price of BTC (Bitcoin) had dipped in the early days of the war. It was cheaper to buy and send crypto and, subsequently, help Ukraine.
Since then, the Ukrainian government has also launched a website to centralize the flow of crypto coming into the country. We can say with certainty then that crypto has helped the Ukrainian war effort. But the question remains: is the war benefitting or harming crypto?
The Benefits of Donating in Crypto
Before we jump into how the war has affected crypto, let’s take a quick look at the benefits of using crypto to help relief efforts:
- The onslaught of war and the subsequent rise in crypto-based donations means that more and more people are now aware of how to access and buy cryptocurrency. This takes it out of the umbrella of being a niche area to eventually a better known and used investment method that can be backed by lawmakers and other key leaders.
- Crypto donations can’t be influenced or regulated by economic or political factors. Even if Ukrainians lose access to their traditional bank accounts, they can receive crypto donations by opening a digital wallet on their devices.
- Donating through crypto also means that younger people get to be involved where they couldn’t have been before. It’s much simpler to understand and send cryptocurrency across as compared to physical donations.
- Even though Ukraine is a warzone, it’s not impossible to use crypto-based aid. Almost all citizen can use the Internet and their personal device to set up a crypto wallet and receive donations straightaway. In fact, this has been one of the key ways in which Ukrainian NGOs have managed to stay afloat despite the ongoing crisis.
Has the Ukrainian War Benefitted Crypto?
Ukrainian government officials have realized and embraced the value of cryptocurrency. The President, Volodymyr Zelenskyy has already approved a law that will build a credible framework for crypto platforms in the country. This means that once the war is over, Ukrainians will be able to legally trade using crypto. What’s more, this law will also bring crypto into the mainstream, meaning it can be regulated using specific policies. This will be useful because more often than not, crypto has flown into Ukraine for criminal or shadow activities.
The flow of crypto into the country has also signaled benefits for those who own BTC. When the war broke out, BTC fell. Smart investors decided to invest immediately, anticipating that the tides would turn. And now they have. Ukraine-bound donations during the war have sparked an interest in BTC across the border, raising its value manifold.
Essentially, Russians are also facing global and internal sanctions on their money and depreciation in their currency. Given these tough circumstances, they have decided to use crypto to move money in and out of the country. Since crypto is unregulated, Russian citizens can buy and sell using their devices and still experience economic freedom. The Russian demand to buy BTC has sent it rising by at least 14% over the past one month period.
Overall, Bitcoin did crash initially as the war escalated, but it has managed to gain a steady footing over the past month. Following BTC’s lead, other coins like Solana, Ripple, and Ethereum have also shown an upward trend.
The War’s Impact on The Crypto Market
There is no doubt that the war has benefitted the flow of crypto. The millions worth of donations that have been sent to Ukraine have not only made the government more susceptible to regulating crypto but there has also been a shift in sentiment towards the concept of blockchain. Crypto stands to become more globally accepted and might make it to the mainstream sooner rather than later. While some traditionalists might have viewed it as a joke before, there is no denying that cryptocurrency must be taken seriously now, especially given its ability to influence or change political movements. BTC has benefitted the most as have investors who own it.
In a nutshell, the crypto market is on its way to becoming a dependable economic channel for citizens and governments alike.