HomeBitcoinWar in Ukraine: Russia uses bitcoin to protect itself from sanctions

War in Ukraine: Russia uses bitcoin to protect itself from sanctions

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When it became clear that Russia was going to invade Ukraine, bitcoin’s detractors had their doubts confirmed: the cryptocurrency plummeted, like the Nasdaq’s smaller tech stocks, from over $44,000 on Wednesday 16 February to $34,300 a week later. The proof was in the pudding: bitcoin is not a safe haven, digital gold, but a purely speculative tool that no one should trust.

The tide turned when the West decided to block Russia’s access to the Swift system of international settlements and sanctioned the Russian Central Bank, to financially stifle Russia. Suddenly, the queen of cryptocurrencies became a way to escape the Western embargo and transfer its funds despite the exchange controls decreed by Russian President Vladimir Putin. The price of the cryptocurrency rose to $43,600 on 1 March, wiping out most of its losses, while trading in roubles has tripled since the beginning of February ($60 million a day according to Chain analysis, quoted by the Financial Times)

Thus the war in Ukraine highlights the weaknesses and virtues of bitcoin: it has no intrinsic value; it is not stable like gold or the dollar, but it allows people to escape the control of governments and transfer money. “In God we trust” is written on the American dollar, but the cryptocurrency is returning to their libertarian convictions: they do not trust the governments that coin money and can deprive them of their savings.

“We are not going to unilaterally freeze millions of innocent users’ accounts “On Sunday, February 27, Ukrainian Deputy Prime Minister Mykhailo Fedorov called on cryptocurrency exchange platforms to block the accounts of Russian residents. “Cryptos are meant to offer greater financial freedom to people around the world,” a spokesman for Binance, the largest cryptocurrency exchange based in the Cayman Islands, told CNBC. A spokesman for Binance, the largest bitcoin exchange based in the Cayman Islands, told CNBC. and “banning people’s access to their crypto-currencies would go against the reason why crypto exists.

 

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