Is there a positive side of cryptocurrencies?
by Rony Hamaui
The war in Ukraine has tested the functionality of cryptocurrencies. Here because. Rony Hamaui’s analysis for Lavoce
Wars, alongside their incredible baggage of pain, have often proved to be important accelerators of innovation. Technologies in the early stages or prototypes have made tremendous progress during conflicts. Suffice it to recall the developments that took place during the Second World War in aeronautics, cryptography and nuclear energy. More recently, many observers have pointed out that during the Arab Spring, social media had a fundamental importance in mobilizing the masses and experienced an incredible development.
In this context, the Ukrainian war, or rather the brutal Russian invasion of the country, has tested the functionality of cryptocurrencies. The general fear was that digital currencies could play a decisive role in circumventing the sanctions imposed on Russia by the West. In fact, in the first days of the war there was an anomalous increase in transactions with Russian counterparties or in rubles. However, at a time when the Russian currency was plunging into the currency markets and inflationary expectations were soaring, these transactions – like the heavy purchases of gold or other goods (durable or otherwise) – were a desperate attempt by many citizens to invest. their savings in safe-haven assets, such as Bitcoin or Ethereum.
Despite Christine Lagarde’s troubling statements at a recent meeting at the Bank for International Settlements, for the moment it does not appear that cryptocurrencies have been used significantly as a payment tool. Firstly, because the Russian supervisory authorities have effectively hindered the birth and development of infrastructures, that is, organized cryptocurrency markets. Secondly, because with their high volatility and high costs, cryptocurrencies turn out to be a bad payment tool. Finally, cryptocurrencies, like all digital currencies, do not guarantee anonymity at all. In fact, transactions on blockchains are public and it is easy to trace the history of funds. So recently the FBI managed to seize several billion dollars worth of cryptocurrencies from illicit activities.
For the avoidance of doubt, in the latest package of sanctions, the American and European authorities had stated that cryptocurrencies were “transferable securities” to which all restrictions apply. Now the European Central Bank would like Washington and Brussels to go further by banning cryptocurrency platforms from accepting orders in rubles or from anyone on Russian soil, as so far some large platforms, such as Binance, continue to operate in Russia.
How Ukraine uses cryptocurrencies
However, the real surprises came from Ukraine which demonstrated, not only on the battlefield, that it was able to manage a difficult situation in an innovative way. President Zelensky did it using social media as no leader had done before to encourage his people to resist and to push the rest of the world not to remain indifferent to the Ukrainian tragedy, his collaborators have done so by using cryptocurrencies in a new way. and transparent to raise money for the Ukrainian cause.
In the aftermath of the outbreak of the conflict, the Ukrainian minister for digital transformation, Mykhailo Fedorov, asked him to create digital wallets in the name of the government capable of accepting payments in cryptocurrencies. Soon after, the Ukrainian government’s Twitter account published the addresses of these digital wallets on which potential donors from around the world could immediately bid by transferring seven digital currencies, including Bitcoin, Ether and other tokens. In just a few days, more than $ 100 million has arrived that the government has spent on immediate needs, such as body armor, night vision goggles, medicines and more.
Bringing money to war zones is notoriously difficult: for example, donors have been forced to ship pallets of $ 100 bills to Iraq and Afghanistan to purchase supplies. Thus cryptocurrencies can be an efficient solution, especially if suppliers are willing to accept them. From this point of view, Ukraine was an easy ground for development, as last year the country ranked fourth in terms of crypto usage according to the global Chainalysis Index, an organization that studies the cryptocurrency market. . With the conflict, the government led by a group of young techno-natives (Zelensky is 44, Federov is 31 and his deputy, Alex Bornyakov, 40) has acted as a catalyst to build an innovative and blockchain-friendly economy.
The spin innovation continued, with the Ukrainian government putting in place a legal framework that protects cryptocurrency users against fraud, while the central bank and the National Securities and Markets Commission were appointed regulators and supervisors. . The Ukrainian central bank could soon issue its own digital currency. All this demonstrates how cryptocurrencies, if they leave the world of anonymity and illegality and are well regulated, can provide a valid contribution to many causes.
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