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Home AI/Metaverse/Web3 Role of Cryptocurrency in Ukraine-Russia war
AI/Metaverse/Web3

Role of Cryptocurrency in Ukraine-Russia war

ambujsaxena05 April 5, 2023 8 Comments

In the recent history, as a generation, we have witnessed various political conflicts- some involving change of regimes while some involving border clashes and wars! As we enter the 400th day of Russia-Ukraine war, I choose to take the side of peace however, there are certain trends that need attention and they may interest you too! After all, sometimes, the destructive nature of conflict can make it ripe for attention, discussion, and problem-solving! In this era of Globalization, countries tend to depend on each other for various tangible and intangible resources. This makes political conflicts appear all the more unnecessary and illogical. However, for some industries and sectors, such political events present a disguised opportunity. In this post, I will take you through the basics of Cryptocurrency, it’s rate of adoption by countries and how it has has impacted the Ukraine-Russia political conflict.

What is Cryptocurrency?

Defining Cryptocurrency and it's application
Defining Cryptocurrency

Moving away from the definition of Cryptocurrency from the graphic above, here is a quick recap of Cryptocurrency basics:

Decentralised or No central authority

In traditional fiat currencies like Rupee, Dollar, Euro, Dirham etc, central authorities and banks control the financial system. However, cryptocurrencies such as Bitcoin and Ethereum help a user bypass the processing and validation of such transactions via a distributed and open network.

Irreversible and Immutable

Transactions cannot be changed once they are recorded on the blockchain.

Anonymous

Two transacting parties do not need to identify themselves when transacting with cryptocurrency. Therefore, users can create anonymous digital identities and digital wallets to transact and still be able to securely authenticate their transactions.

Deflationary by nature

Fiat currencies that central banks can issue and/or print are based on present economic scenario. Inflationary nature of these currencies causes the decrease of value of currency over a period of time. However, many cryptocurrencies have a pre-determined supply of the cryptocurrency at the time of creation. Limited supply of currency causes them to become Deflationary in nature as an increase in demand of the cryptocurrency will cause a corresponding increase in their price.

Objective of using Cryptocurrency over Fiat Currencies?

When it comes to transfer of value, Cryptocurrencies were preferred in key scenarios of the war. Due to traits of Cryptocurrency already shown earlier, transfers are executed virtually instantaneously, securely and directly delivered from one party to another without the need for a transactional intermediary, such as a central bank. However, fiat currencies require a central bank for approvals!

Difference between Cryptocurrency and Fiat money
Difference between Cryptocurrency and Fiat money
Source: www.bitpanda.com

Rate of Adoption of Cryptocurrency by Nations

According to Investopedia article published in Feb 2023, here is the scale of Crypto-friendliness by 11 nations:

Rating Nations on a criteria of Cryptocurrency-friendliness in policy making
Rating Nations on a criteria of Crypto-friendliness in policy making

While Denmark, Germany, Japan, United Kingdom, and Switzerland top the list as nations with most Crypto friendly policies; on the other hand, Qatar, China and United Arab Emirates have placed a blanket ban on Cryptocurrency!

Impact of cryptocurrency on Ukraine-Russia war

I wish to clarify at the outset, that neither me nor Social Buzz, supported an armed political conflict as it has forced millions to abandon their homes, shelling of major cities, and laying down the lives of innocents. Through this blog post, I intend to analyze the extent to which Emerging technology or Cryptocurrency has affected the war related efforts. At the outset, I wish to specify the military strength of the 2 countries.

According to globalfirepower.com, in annual survey, Russia is ranked #2 and Ukraine is ranked #15 out of 145 countries on account of PowerIndex.

Military strength of Russia versus Ukraine
Military strength of Russia versus Ukraine

As you might know by now, Ukraine has a much smaller Defense budget than Russia and consequently, fewer military manpower and arms and ammunition. As a result of Russia’s offensive operations and global outpour of sympathy for Ukraine, the country received donations in crypto and fiat currency in a large amount. However, the amount of donations in cryptocurrency to Ukraine were 44 times of the donations received by Russia in Cryptocurrency.

You might be wondering why would anyone donate for a cause in Crypto when they have the option to donate in a widely recognized fiat currency?

The potential benefits and risks associated with crypto includes evasion of sanctions, cyber crimes and market volatility. Even though, fundraising donations in Crypto pales in comparison to funds raised via Fiat currency however, the Crypto fund raising amounts are worth analysis!

On comparing the Pro-Russia and Pro-Ukraine donations via Cryptocurrency, we came across some interesting stats:

Donations to Russia and Ukraine in Cryptocurrency in Ukraine-Russia war
Crypto donations to Russia and Ukraine

Thus, Pro-Russia groups were able to raise USD 5.4 million while Pro-Ukraine groups were able to raise USD 212 million in Cryptocurrency.

The breakup of Pro-Ukraine donations in Cryptocurrency are as follows:

Breakup of Pro-Ukraine donations in Cryptocurrency

Why are Cryptocurrency donations to Pro-Russia groups under the scanner?

As we saw above, total pro-Ukrainian crypto fundraising since the war began, tops pro-Russian funding by 44 to one. However, the Cryptocurrency funds raised by Pro Russia groups have raised suspicion! According to 2023 Crypto Crime Report, there were USD 456 million as ransomware payments. In 2022, majority of hackers are believed to be based in Russia. Apart from this, BBC reports that 74% of ransomware revenue goes to Russia-linked hackers.

Moreover, Conti, a Russia-based infamous Ransomware group extorted USD 66 million in 2022. Later, Conti alleged its allegiance to pro Russia efforts in the war.

Conti pledges full support to Russia in the war against Ukraine
Conti pledges full support to Russia in the war against Ukraine

KillNet

Another notorious group Pro Russian group has targeted Healthcare organizations. According to Chain Analysis, KillNet has used it’s platform to advertise fundraisers for purchasing military equipment for Russian military. Due to the above reports, pro-Russia Crypto donations have come under suspicion! Although, it is believed that many such reports are considered biased however, I am only presenting report findings.

Check out our blog posts on Metaverse: Decoding Metaverse : The changing landscape of World Wide Web

Conclusion

Just like every coin has 2 sides, Cryptocurrency has it’s merits and demerits. The merits seemingly outnumber the demerits. However, in my honest opinion, ethics should be a guiding factor when it comes to responsible usage of emerging technologies. In the hands of tyrants, even prosperous cities have fell and on the other hand even common men have brought forth dying cities to life. So, a certain level of checks and balances are necessary to curb any untoward usage of technologies that are meant for the greater good.


Sources

https://blog.chainalysis.com/reports/russia-ukraine-war-cryptocurrency-one-year/

https://www.globalfirepower.com/countries-comparison-detail.php?country1=ukraine&country2=russia file:///D:/IMP%20Data/Downloads/Arab-American-Media-Report-1.pdf

The Role of Social Media in the Arab Uprisings

https://www.usip.org/sites/default/files/resources/PW80.pdf

https://www.weforum.org/agenda/2023/03/the-role-cryptocurrency-crypto-huge-in-ukraine-war-russia/

https://mwi.usma.edu/crypto-at-war-how-digital-currencies-will-shape-the-future-of-conflict/

https://medium.com/the-capital/key-characteristics-of-cryptocurrency-and-why-do-they-matter-to-you-5f33e483a40f/

https://www.bbc.com/news/technology-60378009

https://www.investopedia.com/articles/forex/041515/countries-where-bitcoin-legal-illegal.asp

Conti Countries that have adopted Cryptocurrency Crypto crimes Crypto donations Crypto funding Crypto fundraising Crypto policy Cryptocurrency cybercrimes Digital Marketing Trends Killnet NATO Political conflict Russia Russia Ukraine twitter Ukraine Vladimir Putin Volodymyr Zelenskyy
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AboutAmbuj Saxena
An MBA in Branding Communications from one of the topmost MBA colleges in India- Mudra Institute of Communications, Ahmedabad and a Computer Engineer from Jamia Milia Islamia, Delhi; Ambuj Saxena is a seasoned Entrepreneur and loves to stay updated with all the latest Tech. An avid Blogger (whenever time allows it), Ambuj loves to share his wisdom and experience with his online community. A verified author on Medium, Ambuj has penned some really interesting reads both on the Personal and the Professional front. Back in 2016, Ambuj Saxena started off his Entrepreneurial journey with BnBNation - an aggregator of homestays in India and his foray into Digital Marketing through his Boutique Agency - Social Buzz which has grown steadily since then. With a host of prestigious clients in his kitty, Ambuj has delivered on client ROIs, always exceeding expectations. His endeavours have been duly awarded from time to time through his clients words of appreciation and the several awards he has bagged during his career span. Ambuj has also co-authored a book on 'Indian BnBs: An emerging disruptor in the Hospitality sector' which is being used as a Reference book in 4 universities across India.
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Comments (08)

  1. Karen
    April 7, 2023

    oh wow! Thank you so much for the thorough information regarding cryptocurrency’s role in the war, I had no idea!!!

    Reply
    • ambujsaxena05
      April 15, 2023

      Hey Karen,
      I could provide you a different perspective of the war! Though I hate wars as much as any normal citizen does, but i like observing all the stakeholders and their activities. Am i sounding like a spy right now? Hahaa

      Reply
  2. Monidipa
    April 8, 2023

    Your article on the role of cryptocurrency in political conflict is really insightful and thought-provoking. I appreciate the unique perspective you bring to the table. Keep up the great work!

    Reply
    • ambujsaxena05
      April 15, 2023

      Thank you for your kind words, Monidipa!

      Reply
  3. Amber
    April 8, 2023

    With all that is happening in the world my father has been following crypto very closely. Going to share this article with him.

    Reply
    • ambujsaxena05
      April 15, 2023

      Hey Amber,
      Here’s hoping that your father likes the article! Fingers crossed!!!

      Reply
  4. Monidipa
    April 16, 2023

    Hey there! Your article on the role of cryptocurrency in political conflict was an interesting read. I appreciate how you shed light on this unique angle and provided insightful examples. Looking forward to more!

    Reply
  5. Pingback: Decoding Metaverse : The changing landscape of World Wide Web - Social Buzz - Times of India empanelled Digital Marketing Agency in Delhi

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