War in the age of cryptocurrencies

Following the blocking of Swift circuits for state banks and the freezing of some 600 billion euros of Russian reserves abroad, the rise of the world's leading crypto goes hand in hand with what has been a veritable boom in crypto transactions in Russian rouble and Ukrainian hryvnia. NATO measures led to a sharp drop in demand for rubles abroad, and even though the national bank raised its interest rate to 20% from 9.5%, the currency's collapse was as inevitable as it was predictable. After the sanctions, a euro began to trade for 140 roubles and a dollar for 108 roubles, while bitcoin, after an initial drop, is now worth more than the currencies of Saudi Arabia, Mexico, Thailand or Israel: 4 million roubles per bitcoin, the highest price ever, so much so that even V-buck, the currency dedicated to Fortnite's in-game micro-transactions, is worth more than the rouble. At a time of geopolitical uncertainty and economic instability, oligarchs are looking for alternative ways to keep their savings safe, initially by investing in watches and jewellery, before luxury brands decided to withdraw from Russian soil, now with crypto. 

As Ethereum founder Vitalik Buterin can attest, Russians are already experts in cryptocurrencies, and the country ranks 18th in the world in terms of overall adoption. It is no coincidence that when NATO imposed the first sanctions following the annexation of Crimea - a very high price to pay for Moscow: $50 billion a year according to the New York Times - the cryptocurrency market experienced its first big explosion on Russian soil. Today, in 2022, bitcoin has become a vital resource, even for Ukraine, which is financing part of its military expenditure with it. In February, the Ukrainian parliament passed a law to "legalise" cryptocurrencies, making it the fourth most widely used cryptocurrency in the world, according to blockchain research firm Chainalysis. 

Often considered unreliable due to their fluctuations in value over time, cryptocurrencies are now an essential part of geopolitical balances. With their decentralised and liberal nature, which knows no nationalities or sanctions, digital currencies represent an essential resource for both Russia and Ukraine. In part, a possible answer to the economic problems Russia is facing - Putin and the oligarchs could use bitcoins as a store of value, to regenerate, in the short term, an economy undermined by sanctions and military spending - and at the same time the tokens have proved an effective means of funding solidarity initiatives and the Ukrainian resistance itself. Cryptocurrency exchange FTX, for example, has given the equivalent of $25 to every Ukrainian user on its platform to use at their leisure, one of the co-founders of Russian protest group Pussy Riot, Nadya Tolokonnikova, organised a fundraiser to sell 10,000 NFTs of the Ukrainian flag, while Russian-born ethereum founder Vitalik Buterin has encouraged people to donate to humanitarian efforts in the country via digital currencies. An unexplored and often fickle terrain, but one with infinite potential, and, for better or worse, one that knows no rules.