Ukraine’s Crypto War Throughout History

Written by TechFlow Intern

"The world's first encrypted war" is how The Washington Post described the Russia-Ukraine war.

I have an immature hunch: the war in Ukraine will rewrite or accelerate the historical process of Crypto to a certain extent.

One thing that most people overlook is that Ukraine legalized cryptocurrency before its war with Russia.

On February 17, the Ukrainian government’s official website announced that the parliament had overwhelmingly passed the amendment to the virtual assets law proposed by the president. The bill recognizes the legality of virtual assets in Ukraine.

This timing seems a bit delicate.

Later I raised a conjecture on Twitter that the Ukrainian government and army were previously receiving Bitcoin and other cryptocurrency donations from all over the world to support their armed conflict with Russia.

For example, there is an organization called Come Back Alive, which was founded in 2014 to provide military equipment, training services and medical supplies to the Ukrainian army. The foundation began accepting cryptocurrency donations in 2018 and received a large amount of cryptocurrency donations on the eve of the tense situation.

Subsequently, the Ukrainian government took personal action and released the wallet addresses of donated items on Twitter, receiving more than US$22 million in donations within two days.

The entire Crypto industry is almost overwhelmingly in support of Ukraine.

FTX CEO Sam Bankman-Fried said on Twitter that the company will give $25 to every Ukrainian who has an account on the exchange.

Ethereum founder Vitalik Buterin called on social media to provide support to local Ukrainians through UkraineDAO.

Tron founder Justin Sun announced a donation of $200,000 to Ukraine.

Binance donated $10 million and launched the first crowdfunding of the Ukraine Emergency Relief Fund. Founder CZ said, “This is where blockchain shines, global fundraising.”

Uniswap even built an interface specifically to swap any ERC-20 token for ETH, which can then be sent directly to the Ukrainian government in a single transaction.

The Crypto industry is currently generally pro-Western in ideology. As Vitalik Buterin said, Ethereum is neutral, but he is not.

Money War

Cryptocurrency and war remind me of computers and the Internet, which are also products of war. The main predecessor of the Internet is ARPANET, which is the world's first operational data packet switching network developed by the US Defense Advanced Research Projects Agency and is the ancestor of the global Internet.

In 1974, Robert Kahn of the Defense Advanced Research Projects Agency (ARPA) of the U.S. Department of Defense and Vinton Cerf of Stanford University developed the TCP/IP protocol. On January 1, 1983, ARPAnet changed its network core protocol from the network control program to the TCP/IP protocol, which has become the core of today's Internet.

The Internet transmits information, and blockchain transmits value. Information and value are the most important invisible battlefields in modern warfare, and may even be more important than physical warfare.

Before the hot war, there was cyber war, security attack and defense, and public opinion war.

Figure: Dean of 360 Cyber ​​Security Research Institute

War is a money-shredding machine. For example, the Iraq War in 2003 cost the United States between $28 billion and $30 billion in less than two months of attack.

Therefore, how to make money, how to maintain the financial stability of one's own country and how to undermine the financial stability of other countries have become an invisible financial battlefield.

Crypto assets are becoming a powerful emerging war crowdfunding tool , crypto technology service company Elliptic has concluded.

When faced with financial sanctions, unlicensed Crypto may become a hedge against sanctions.

Therefore, it is difficult to say whether Crypto is good for Ukraine or Russia, but Bitcoin is once again at center stage.

SWIFT, Switzerland and Bitcoin

Remember the Cyprus debt crisis in 2013? Bitcoin’s first bull run was also due to this event, and many people started to learn about Bitcoin.

In March of that year, a serious debt crisis broke out in the "tax haven" Cyprus, and its economic output had been shrinking for three consecutive years with high unemployment.

In order to cope with this serious situation, Cyprus President Nix made a televised speech on April 17, saying that in order to obtain the EU's 10 billion euro emergency aid loan, the government will impose a deposit tax on local bank deposit users; the tax rate for deposits of 100,000 euros or more is 9.9%, and the tax rate for deposits below 100,000 euros is 6.75%.

The public was not happy about this and frantically ran to withdraw cash. Meanwhile, the Bitcoin network experienced its first frantic influx since its birth. Some Cypriots who knew about Bitcoin rushed to the Bitcoin network and exchanged part of their currency for BTC to avoid policy risks. As a result, the price of Bitcoin rose from more than 30 US dollars to 265 US dollars in just a few days, achieving a nearly tenfold increase.

Bitcoin was born during the 2008 financial crisis, and gradually evolved during the 2013 Cyprus debt crisis, the US government shutdown crisis, the 2015 Greek debt crisis, and the 2016 Brexit referendum.

This time it is a war crisis, and Bitcoin has ushered in its own "perfect narrative".

On February 26, the United States, the European Union, the United Kingdom and Canada issued a joint statement announcing a ban on Russia's use of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) international settlement system.

If a country is excluded from the SWIFT system, it can be compared to a natural person having his or her account deleted from social media. SWIFT is therefore considered a "financial nuclear bomb" among sanctions. North Korea and Iran have previously been treated in this way.

Switzerland, the piggy bank of the world's richest people, has rarely abandoned its neutral stance and decided to follow the EU in imposing sanctions on Russia and freezing Russian assets.

At the same time, Russia has implemented foreign exchange controls, prohibiting residents from remitting money to foreign bank accounts and prohibiting people from carrying large amounts of foreign currency out of the country.

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Traditional financial value transfer facilities are paralyzed, assets are frozen by centralized institutions, capital controls are implemented... This just fits the original narrative of Bitcoin or blockchain, a permissionless, decentralized value transfer network.

Technology is neutral, and so is Bitcoin, but for European and American governments, their concern is how to prevent Russia from using cryptocurrencies to evade sanctions.

The U.S. Treasury Department has issued new regulations prohibiting Americans from providing any support to Russian oligarchs and entities, including using digital currencies or assets for transactions. In addition, the U.S. Treasury Department also requires Binance, FTX and Coinbase, the three major cryptocurrency exchanges, to block sanctioned persons and addresses.

The Ukrainian side was even more radical. The Ministry of Digital Transformation sent formal letters to eight trading platforms, including Coinbase, Binance, Huobi, KuCoin, Bybit, Gate.io, Whitebit and the Ukrainian exchange Kuna, asking them to stop providing services to Russian users on the grounds of "concerns that crypto assets will be used to evade sanctions."

Coinbase, Binance, and Kraken each expressed a “protest” that “the exchange cannot freeze the accounts of Russian customers without legal requirements.”

Bitcoin is decentralized, but exchanges are centralized, and exchanges are facing the test of the collision between decentralization and centralized power.

Money Freedom

In 1791, freedom of Speech, Religion, Press, Assembly, and Petition were written into the constitutions of some countries.

But something seemed to be missing? Money freedom.

It wasn't until 2008 that Money Freedom became technically possible.

In Li Xiaolai's words, Bitcoin is the first time in human history that technology has been used to ensure the sanctity and inviolability of private property.

Especially in a war environment, when a sovereign state itself is under threat, the currency relying on sovereign credit is unlikely to be spared, and super-sovereign hard currency is a life-saving straw. In the past, it seemed that there was only gold, but now there is an additional option. Artyom Fedosov, a developer at Silicon Valley startup Portside, has a deep understanding of this:

As a friend said, holding Bitcoin is not about expecting it to soar, but about hoping that one day it can save his life, the life of his entire family.

Finally, I hope the war ends soon.

In war, politicians provide the ammunition

The rich provide food,

The poor offer their children...

After the war, politicians took back remaining ammunition

Rich people grow more food

The poor can only look for their children's graves.

MAKE LOVE, NOT WAR!

PEACE!