Russia Ukraine Crisis: How Bitcoin and other crypto becoming critical in the war

Bitcoin and other cryptocurrencies are playing a major role in providing financial infrastructure at the Russia-Ukraine war. Here is how cryptos are being capitalised:

1. Donations to Ukraine army

After Moscow launched a large-scale invasion into Ukraine early Thursday, Bitcoin donations to the Ukrainian army surged. Over a 12-hour window, nearly $400,000 in Bitcoin was donated to Come Back Alive, a Ukrainian NGO providing support to Ukraine’s armed forces, as per the data from blockchain analytics firm Elliptic. Bitcoin allows donors to bypass financial institutions that might block payments to Ukraine.

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2. Help Russia fight against sanctions

U.S. President Joe Biden announced a slew of 'strong sanctions on Russia that aim to limit its ability to do business in dollars and other major international currencies. But those sanctions might not be very effective in a country that is planning to legalise cryptocurrencies soon. Digital currencies might help Russia buy goods and services while avoiding banks or institutions that adhere to sanctions. Unlike fiat currencies, which need to move through third-party institutions that have the ability to freeze or block them, cryptocurrencies are decentralised, and government sanctions won't really affect their transactions.

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3. Funding pro-Russian separatists

The Ukrainians now are copying the Russians’ usage of crypto assets for fundraising since the commencement of the Russia-Ukrainian War. Pro-Russian separatists in eastern Ukraine have been raising funds in Bitcoin since the early days of the conflict, through a number of internet campaigns that accepted cryptocurrency payments. Between 2014 and 2016, one such effort, dubbed 'Save the Donbass' collected at least 68 Bitcoin donations.

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Raising money in crypto is advantageous because such assets are tough to confiscate, CNBC wrote quoting Boaz Sobrado, a London-based fintech data analyst.