War in Ukraine: How cryptocurrency is acting as double-edged sword for the war-torn country
During this time of crisis, money seems to flow towards safe havens like gold. However, in the Ukraine-Russia war, Bitcoin seems to look in a better position.
New Delhi: Often when a country witnesses conflict, economic conditions suffer the most. Apart from human lives being affected, the economy also gets messed up. These happen due to the destruction of property because of bombings, increase in debt levels to finance the conflict, high uncertainty in terms of the future of the country and a huge opportunity cost, which includes building weapons otherwise can be lent in the improvement of the country’s economy.
With the conflict between Ukraine and Russia, there has been a bank run that happened on both sides of the border. A bank run is an event where a large number of depositors wish to withdraw their money from the bank. Besides, the Russian central bank raised its interest rates to a whopping 20% to stabilise the freefall of the value of the rouble.
During this time of crisis, money seems to flow towards safe havens like gold. However, in the Ukraine-Russia war, Bitcoin seems to look in a better position. Since it is not possible to carry gold around and the value of fiat currency is free-falling, it is better to get cryptocurrency handy.
Notably, testimonials are coming from Ukrainian refugees who have some financial stability only because they carried along with cryptocurrency with them. Also, the Ukrainian vice-president tweeted about accepting international support through cryptocurrency and this resulted in the crypto community donating more than $70 million.
Cryptocurrency can be regarded as a double-edged sword for Ukraine. Even though it can be considered a great alternative in terms of receiving monetary aid directly and also a means to circumvent the monetary sanctions imposed on the Russian oligarchs and the Russian government. From both angles, cryptocurrency is politically neutral and is currently in the limelight.
Recently, people have started stacking up Bitcoins as the number of addresses with more than 1,000 Bitcoins has spiked upwards. Besides, Bitcoins to rouble transaction volumes have also made record highs. This means that people are selling more roubles and buying more and more Bitcoins.