As legacy financial rails have broken down amid Russia’s invasion of Ukraine, Bitcoin is proving to be a critical lifeline for Ukrainian people.
The article describes Bitcoin’s role in the Ukrainian economy during wartime. Although Russia’s unprecedented aggression has caused serious threats to people’s lives and national security, Bitcoin offers a reliable solution. Despite the banking system not working properly, Ukrainians are still able to support their army and each other. As Bitcoin is legal in Ukraine, both government officials and citizens can reliably count on it on a daily basis.
People from all over the world actively contribute to Ukraine’s fight for freedom. The recent events also illustrate how Russia’s military aggression appears to be the major environmental threat, while Bitcoin assists in minimizing it.
A Country In Need Of A Lifeline
Ukraine faces unprecedented aggression from Russia in a conflict described by the BBC as the “biggest war in Europe since 1945.”
In an attempt to pursue its imperialist policies, Russia now deliberately violates basic international treaties and legal standards such as the Geneva Conventions, which regulate military conflicts and humanitarian treatment.
The Ukrainian military service reports that more than 2,000 civilians were killed during the first week of Russia’s invasion. Russia’s military forces attack and destroy residential buildings, hospitals, kindergartens and other objects of civil infrastructure despite claiming a supposed focus on military bases. So-called “green corridors” that should allow the evacuation of civilians and provide the most affected areas with food, water and supplies have not been working adequately, causing a humanitarian catastrophe in such cities as Mariupol and Volnovakha.
The basic rights of millions of Ukrainians, including the right to life, are threatened every day. However, traditional institutions remain largely ineffective in providing the required protection to vulnerable groups. The international community and NATO have not approved Ukraine’s request for “closing the sky” and the prevention of Russia from utilizing its air forces and artillery from attacking Ukrainian cities and its civilian population. According to Reuters, 74% of Americans support the introduction of a no-fly zone over Ukraine, and most Ukrainians expect that this support will contribute to the changes in the NATO policies.
The Conflict’s Financial Implications And Bitcoin As A Solution
In addition to the humanitarian issues outlined above, Ukraine’s financial system has proved to be unprepared to meet such pressures.
While the Ukrainian government is still able to fulfill its obligations regarding national debt payments, numerous problems exist at the micro level. The banking system does not work properly, especially in the most affected areas. Electronic payments have become unavailable for millions of people, while the shortage of cash and problems with ATMs make it difficult for ordinary citizens to receive or send funds. The massive withdrawal of deposits by people across the country revealed the inherent instability of fractional reserve banking, as has been extensively explained by Murray Rothbard and other Austrian school economists.
Under such conditions, Ukrainians face a number of serious issues, such as the need to support the Ukrainian army as well as the most vulnerable groups, and to perform at least some basic transactions. As the traditional instruments appear to be either unavailable or inflexible to address such needs effectively and urgently, Bitcoin emerges as the major alternative that can literally save lives during wartime.
In particular, Ukrainians using Bitcoin would be able to make required transactions safely and independently of any centralized control. Bitcoin also addresses the threats of physical destruction of property, as the risks of fires and artillery attacks remain critical in many cities. Another important advantage is the ability to preserve anonymity or pseudonymity that may be crucial for people living in the currently occupied areas. In this way, they can safely support the Ukrainian army or other people in need.
A growing number of Ukrainians are relying on Bitcoin for making their payments and transactions nowadays. The legal status of Bitcoin in Ukraine has proved to be important for uniting the efforts of government officials, entrepreneurs and other socioeconomic groups.
Most if not all major non-governmental organizations accept bitcoin as a contribution option. Taras Chmut, the head of the Ukrainian support organization “Come Back Alive,” for instance, recognizes cryptocurrency as being the best option available at the moment. According to him, due to problems with the banking system in Kyiv, only cash and cryptocurrency may be used for making purchases of needed supplies. However, cryptocurrencies are definitely more convenient and reliable than cash, as they allow for the accepting of contributions without geographical restrictions. The decentralized nature of Bitcoin allows different non-government agencies and local activists to perform complementary functions, thus protecting the ideals of freedom in Ukraine.
The current situation in Ukraine also offers yet another refutation of the common biased argument about the supposed negative impact of Bitcoin on the natural environment. An actual environmental threat was caused by Russia’s military forces on March 4, when they used heavy weaponry to capture the largest nuclear power plant in Europe, the Zaporizhzhia nuclear power station. According to the Ukrainian Ministry of Foreign Affairs, the potential environmental catastrophe could be 10 times more severe than the Chernobyl disaster. Such “a special military operation,” as Russian President Vladimir Putin has called his invasion, proves that most threats to humanity and the global civilization are centralized by their nature. In contrast, the voluntary and independent coordination of many people across the world may address such threats.
Ukrainians have successfully implemented various humanitarian projects and environment protection initiatives because they can use Bitcoin during wartime. It is no coincidence that Russia’s authorities have considered either strictly controlling all cryptocurrency transactions or prohibiting Bitcoin altogether in their attempt to avoid any decentralized movements in their country.
This is a guest post by Dmytro Kharkov. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
