3 Surprising Uses of Crypto in the Russia-Ukraine War

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Coinmonks

4 min readMar 18, 2022

As of this writing, about a million Ukrainian refugees have fled the country and Pentagon officials estimate that casualties for both Russian and Ukrainian troops are in the thousands. The conflict has thrown the economies of both countries into downward spirals, generating financial distress and despair for the innocent citizens of both Russia and Ukraine.

However, cryptocurrency technology has quickly emerged as a surprisingly effective tool to ease some of the economic chaos caused by the fighting in Eastern Europe.

Crypto technology allows transaction tracking

It’s important to note that economic experts do not expect the Russian government to be able to skirt global economic sanctions through cryptocurrencies. It’s reported that 80% of Russia’s daily foreign exchange transactions and half of its international trade are conducted in dollars.

Russia will need billions of dollars every day to run its country and fund its war, so it would be nearly impossible for Moscow to convert such massive amounts of funds to crypto and then move those funds without being detected and frozen by those who are on “high alert” to catch that type of activity. On top of that, the liquidity on crypto exchanges would not be enough to steadily handle the transaction volume that Russia needs to function.

Rather than risk having its crypto assets tracked and seized, the Russian government is pulling more traditional economic levers such as ordering its energy companies and commodity exporters to sell 80% of their own foreign currency holdings to keep the Bank of Russia from having to exhaust its own cash reserves. Those moves will also help support the Russian ruble, which has lost a considerable amount of its value. Foreign investors are also blocked from selling securities held in Russia and moving money out of the country. Lastly, the Kremlin has temporarily suspended interest payments on its $29 billion of ruble-denominated debt to foreign investors. Instead, Russia will use those funds for its own immediate needs, leaving non-Russian investors high-and-dry for now.

Tens of millions worth of crypto donations have been raised

Since the war began on Thursday, Feb. 24, millions of dollars’ worth of cryptocurrencies have flooded into official digital wallets of the struggling Ukrainian government. The very real power of cryptocurrency can be seen in the tweet posted by crypto-influencer Nathanial Whittemore to his 56,000 Twitter followers: $50 million’s worth of cryptocurrencies have been donated from around the world to help fund Ukraine’s resistance efforts. This accomplishment was achieved without the support of a single NGO or international agency spearheading the action.

Ukrainian citizens themselves are also turning to crypto as an alternative to Ukrainian financial institutions. Rocket attacks, cyberattacks, and “denial of service” malware have hobbled many of Ukraine’s financial institutions, severely limiting people’s access to bank accounts and foreign currency. Crypto has emerged as a useful economic lifeline to innocent Ukrainian citizens across the war zone.

Crypto is also being used as a store of value

Protests and unrest continue to bubble in Russia among its people who want Russian leaders to abandon its war against Ukraine. Russia’s invasion of its neighbor sparked nearly instant and unified condemnation from the global community, as well as a rapid and widespread economic lockdown against Russia.

Within days, Western nations voted to freeze assets of several Russian banking systems to prevent money moving across the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. These monetary maneuvers further isolated Russia economically, crashing the Russia ruble by more than 50% since Feb. 28.

There have since been many media reports of Russian citizens forced to stand in lines for hours to withdraw their funds from banks and put them into other assets — mainly the U.S. dollar, while others sought and bought Bitcoin as their safe haven.

Despite the violence and suffering arising from the Russia-Ukraine conflict, crypto technology has emerged as a surprisingly useful tool to ease some of the economic burden resulting from this devastating situation.

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3 Surprising Uses of Crypto in the Russia-Ukraine War

Crypto technology allows transaction tracking

Tens of millions worth of crypto donations have been raised

Crypto is also being used as a store of value

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Written by Cointelli