Uncertain Utility
Happy Tuesday, everyone.
Putting together this opinion letter was difficult. I usually write these letters on Mondays. But, as I was gathering my thoughts yesterday, it seemed uncalled for to currently share my opinion on anything.
Many people whom I either hold dear or are close to me are currently affected by the situation in Ukraine. I tend to refrain from extensive political debates, even in my personal life. The truth is, I am astonishingly uneducated about politics, despite my background in mathematics, economics, finance, humanities, and arts. I understand that, in a sense, I am extremely privileged. Being able to choose not to care much about politics is both a blessing and ignorance that many people can’t afford to have. Anyway, I will not voice any political views nor pretend that I have educated myself enough to do so. My hope is that you also educate yourself before you debate, so that we have better chances of coming together instead of further dividing each other. More importantly, I hope that all the people affected by the current situation are doing as OK as possible and that we all come out of this situation more united.
With that said, I am not publishing the second edition of “Crypto’s Uphill Battle” this week. I will pick this up next week, diving into how future developments in quantum computing might affect blockchain technology and its adoption. Truthfully, I couldn’t care less right now and believe we should focus on the current situation (again, this is not political commentary). Since you are here to read, learn, and think about crypto, maybe we can try to figure out what role crypto might play in this whole thing.
Both the Ukraine and Russia have recently started to embrace cryptocurrencies. During more recent wars/conflicts, cryptocurrencies had not nearly reached the popularity that they have reached today (also please understand that I am not taking a side here; Russia merely has not officially “declared war,” which is a formal act by which a state usually announces existing or impending war — but let’s not get hung up on word play). I believe the current situation is the first major conflict/war, in which cryptocurrencies could play a significant role. Funds have never been able to be moved more easily and seamlessly across borders than today. As a result, funds are more easily made available to both sides.
Mykhailo Fedorov, Vice Prime Minister and Minister of Digital Transformation of Ukraine, has even taken to Twitter to ask for support — advocating for donations in the form of Bitcoin, Ethereum, and Tether. As of today, Ukraine has been able to raise around $25 million in cryptocurrencies through crowdfunding. This figure will certainly keep climbing over the next few days.
The Washington Post however suggests that such donations may be more symbolic than anything else. Apparently, Ukraine had already received around $650 million in weapons from the US last year, yet seems clearly inferior in a conflict with Russia. Although likely accurate, I would like to advocate a different perspective: The United States using tax payers’ money (without direct consent) to fund arms is completely different from individuals choosing to support civilians in Ukraine. The advent of cryptocurrencies allows citizens to more transparently donate funds and more freely decide who should receive money. While governments may be funding wars (and make no mistake, they have their own agenda), civilians can donate funds in an attempt to directly help civilians. Regarding the funds received by Ukraine, they will apparently be used to “smash as many Russian soldiers as possible,” as stated by a Ukrianian government spokesperson. Consciously funding a war is a difficult decision that most of us cannot easily make. If we as a society collectively agree to help yet not fund wars, we now have a way to allocate our help more efficiently.
However, at the same time I must admit that empowering individual citizens can also be dangerous. Think about extremely high net worth individuals, who (alike governments) could exploit such situations to further their own agenda. Especially during chaotic times, they are much more likely to get away with it.
Anyway, let’s move on to some things you might not have not known or thought about yet: (1) Crypto is still not widely enough adapted enough to easily pay for food or medical supplies in a conflict zone. As long as crypto is not widely regarded as a form of money, one first needs to convert their crypto into money. This might not be an easy task, as the majority of people is still uncomfortable dealing with crypto, exchanges, wallets, verification, etc. Furthermore, people in conflict zones may not always possess the necessary infrastructure to access and distribute their digital funds.
(2) People might agree with the many sanctions imposed on Russia and fear that Russian officials may be able to circumvent these sanctions through the use of crypto. If crypto is sent through centralised exchanges, there is a high chance that these centralised exchanges will disclose transactions to governing bodies (which again would allow these to impose sanctions, even on crypto).
Both examples demonstrate that cryptocurrencies’ utility is still often extremely unclear, especially during wartime. Ultimately, we (a) don’t have enough data to try and make sense of crypto’s role in all this and (b) are still having difficulties theorising whether the positives outweigh the negatives (regardless of what side you are on).
Personally, I still think that crypto-adoption has been necessary, specifically in this situation. Over the last few days on social media, I have come across numerous links to donation pages asking for help. After doing some research, I found out that many of these ‘donation pages’ are either scams or too intransparent to be considered trustworthy. I was furious.
Furious, with people who set up fake donation pages, preying on the good-hearted people who are willing to help. But, even more furious with the ‘good-hearted’ people who are either (a) too lazy to do their research before donating or spreading false information or (b) simply do not care and post because it makes them look good and stay relevant.
The additional transparency that blockchain technology provides is not merely a nice feature; it is absolutely necessary to save us from our lack of judgement in such important situations. Since we clearly aren’t collectively capable of thinking critically (in this case), there should be a mechanism in place that doesn’t leave anything up to chance.
Make peace, not war.
Team Lithium x Seb
