Home Energy assets Crypto and the Russian-Ukrainian War: What Investors Need to Know | Cryptocurrency

Crypto and the Russian-Ukrainian War: What Investors Need to Know | Cryptocurrency

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The cryptocurrency came into the limelight during the Russian invasion of Ukraine. Cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) played an unprecedented role in the war effort in both countries.

As millions of Ukrainians flee their homes and even their country, they face a cap on cash withdrawals from banks, leaving cryptocurrency as a safe haven to gain quick access to cash. Meanwhile, global sanctions have forced Russia to consider accepting cryptocurrency in exchange for energy exports.

The decentralized crypto ecosystem has given both countries a flexible alternative for survival, while allowing people around the world to stay financially connected in times of crisis. These forces have further accelerated the adoption of crypto.

However, resorting to cryptocurrency presents its own set of challenges. Here’s what you need to know about the role cryptocurrency played in wartime:

  • Crypto’s role in the Russia-Ukraine war.
  • How Crypto Helps Ukrainian and Russian War Efforts.
  • How cyberattacks affect the crypto market.

The role of crypto in the Russian-Ukrainian war

Seeking a way to provide quick aid to Ukraine in response to the invasion, people around the world sent donations in the form of Bitcoin and Ether, the native token of the Ethereum blockchain, to the Ukrainian army and for humanitarian aid. . The Ukrainian government has raised over $60 million through crypto donations from Bitcoin, Ether, and the stablecoin Tether (USDT). Crypto has proven to be a quick and efficient way for the people of Ukraine to get immediate funding for supplies.

At the height of the war, Ukraine passed a law aimed at creating a legal framework for cryptocurrency, allowing crypto exchanges to operate in the country and banks to open accounts for crypto businesses. Ukraine’s Ministry of Finance will also amend the tax and civil codes to incorporate virtual assets. This marks a huge step forward for digital assets in terms of perception in Ukraine and around the world.

Since the start of the invasion, Russian companies have been sanctioned by the United States, the United Kingdom and the European Union, with bans on the export of goods and restrictions targeted at wealthy business leaders. The United States has banned imports of Russian oil, liquefied natural gas and coal, and the United Kingdom is taking gradual steps to phase out imports of Russian oil by the end of the year.

Economic sanctions against Russia led to a depreciation of the ruble and a crippled Russian stock market. In response, Russia’s central bank raised its interest rate to 20% to support its currency. But because its economy is cut off from the global financial system, Russia’s gross domestic product could fall by up to 15% this year, and the country will fall into a very deep recession, according to the Institute of International Finance.

Reports have indicated that Russia is looking for flexible ways to receive payments for energy exports and may turn to cryptocurrency for oil and gas transactions.

However, individuals can already transact in cryptocurrency. “You don’t need a government to receive and send bitcoin,” says Joe Burnett, mining analyst at Blockware Solutions in Atlanta. Citizens of Ukraine and Russia can allocate to and from Bitcoin caches without interference, he says.

How Crypto Helps Ukrainian and Russian War Efforts

As the Russian-Ukrainian conflict escalated, millions of Ukrainians rushed to ATMs to withdraw cash and leave their homeland for neighboring countries. In response, Ukrainian President Volodymyr Zelensky imposed martial law, limiting cash withdrawals in local currency as well as foreign currency. This has left some Ukrainians without access to their money due to long queues and the urgency to evacuate the area.

Crypto allows people to send funds immediately to friends or family who need help, says Tony Perkins, founder of Elephant Money, a decentralized financial payment network using blockchain technology. For example, some Ukrainian refugees carried digital assets on a USB stick for quick transactions to help them reach their destination. In these scenarios, crypto has been a boon due to its borderless payment capabilities.

A similar scenario has developed in Russia, where huge queues have also formed at ATMs amid speculation that Russian banks will close. Russian banks have been banned from SWIFT, a global payment system, preventing the country from easily exchanging money around the world.

Although Russia may seek to use crypto as a way to evade sanctions, experts say crypto’s role in the war has been widely viewed as positive. “The Russian-Ukrainian war has clearly demonstrated Bitcoin’s censorship-resistant properties. For both countries, good or bad, capital can be moved and allocated to and from Bitcoin without any government, bank or power cannot intervene,” said Burnett.

According to Perkins, the situation “also illustrates that sovereign governments should hold some of their reserves in crypto for national security.”

How Cyber ​​Attacks Are Affecting The Crypto Market

With the rise of cryptocurrencies, hackers have stepped up their efforts to execute cyberattacks against crypto companies. Despite blockchain technology’s reputation for security, digital assets are still susceptible to cyberattacks and their owners vulnerable to theft. As the cryptocurrency market grows and decentralized finance attracts more users to the space, crypto is ripe for cyber hackers.

“Cyberattacks are not good for any market. Because so much money is flowing into the crypto asset class and we are in its infancy, many cyberattackers will target the low hanging fruit,” Perkins said.

The war in Ukraine has injected an additional element of danger. As the dispute dragged on, the US government reached out to crypto companies to urge them to protect themselves against potential Russian cyberattacks in retaliation for US sanctions.

There is, however, a silver lining to every cyberattack. With each breach, crypto companies find solutions to improve their networks and prevent the same hacks from happening again.

“Every time a cyberattack happens, the crypto asset class gets stronger,” says Perkins. “Sometimes a white hat hacker will identify risks, and other times malicious actors will exploit a project, but every time an attack occurs, we developers learn from the mistakes made.”

Crypto investors can protect their digital assets by keeping them in “cold storage” or offline. This means keeping digital assets on a USB drive, for example. Spreading your digital assets across multiple digital wallets also improves the chances that in the event of a cyber attack, hackers won’t be able to access your entire crypto wallet.