On 24th February, 2022 when Russia officially began the war with Ukraine the cryptocurrency markets mostly remained unaffected as they had already reached all time high and were somewhat in a bearish market. But this was just the beginning, as the war continued and casualties rose to the thousands with entire cities being captured or destroyed, the fear among the wealthy Ukrainians reached a peak, and without NATO or American allies support the wealthy Ukrainian families and the middle class alike began investing in cryptocurrencies.
This was fueled even further by the uncertainty around the intentions of Russia and Ukraine's burdened economy that now had lost almost all their trade routes to Asia which included one of their largest trade partners China. What direct affect this accumulation frenzy had on Bitcoin markets is two fold, on one end the market was correcting and was in a state of price discovery until Bitcoin reached support at $15500 almost loosing all its previous gains. On the other hand the fear of a larger war in Europe began a demand push for Bitcoin and other cryptocurrencies and one might argue that this helped stabilize the price of Bitcoin which could have gone much lower without this surge in demand. Bitcoin rose by 320% since its bottom and sits at close to $60000.
Note: Russia Previously invaded Ukraine around the same date in 2014 on 20th February.
President Vladimir Putin previously said he's leery of bitcoin because cryptocurrencies are not backed by a central bank. Which is true however, cryptocurrencies are not supposed to be regulated by any Bank, if that was so central banks would fork bitcoin and dilute the market the way they dilute their own national currencies. A cryptocurrency can only be controlled by imposing laws on the people that use those currencies at Point of Sale. This however cannot stop people from freely doing business with each other in Bitcoin, but this does stop larger transactions that could go into the $100's of millions of dollars to not go unnoticed, as they would not be such liquidity between people at a retail level in a P2P transaction.
In a turn of events President Vladimir Putin a previous skeptic of Bitcoin has signed a bill to make Bitcoin mining legal. This is huge! Firstly for Russian miners who were left in the dark during the war and secondly for Russia , that has so much to gain from entering the realm of cryptocurrencies. There will be multiple outlooks to the events that could lead to a fully digital Russian economy, however i will state below the positive impact cryptocurrencies would have on the economy, while cryptocurrency markets capitalize on Russia's investments.
- Crumbling government infrastructure can be revitalized and modernized. Russia though one of the largest resource rich nations has but one major problem, management. Russia's bureaucracy has been known to be lax towards managing corruption within the government, including revenue through oligarch side deals that have not allowed Russia's economy to grow at the pace it should. They are countless Ethereum based applications and blockchain based solutions that can literally remove any loopholes that the Russian government faces when it comes to logistics, accountability, taxation and operations management.
- Government backed cryptocurrency. A government backed cryptocurrency or an e-Rubble will not only make the lives of Russian citizens better but also make it easier for them to do business with India and China in an attempt to use an alternate currency other than the dollar, the transactions could happen on the Bitcoin ecosystem where, the Russian Central Bank begins holding Bitcoin along with its Gold Reserves.This is in light of the U.S sanctions. The U S was once Russia's largest trade partner.
- Russia's Landmass on the Blockchain. Russia having a large landmass that sprawls all the way to the eastern most parts of Asia are scattered an unaccounted for. Blockchain technology can better manage if not generate revenue by assisting in leasing land for cultivation, industries and forest management. Russia is the largest exporter of renewable timber, which is a very difficult industry to manage without full accountability and operations scrutiny on the blockchain. With the power of cryptocurrencies, buyers from around the world could do business in the form of shadow trading with Russian citizens without the intervention of their own governments or central banks. i.e Shadow trading is somewhat like drop shipping except it is the purchase and delivery of goods between two parties managed by the trader who provides short term finance for transit and operations until the buyers has funds available after the sale of the goods in his/her respective country.
- Overall Business Trust ratings. The west somewhat acts as a steward of trust. The U.S in particular goes to great lengths in an attempt defame, criticize and downgrade economic ratings whenever they seem fit, whether it is Iraq, Iran, Afghanistan, China or Russia. This criticism comes in the form of sanctions and other trade blocking techniques that are somewhat related to economic warfare. Blockchain and cryptocurrencies can play a vital role in making the tech savvy businessmen from around the world to make their own judgements on how to do business and who to do business with depending solely on past performance and deliverance in an unbiased global environment where even the government has to adhere to the rules of a smart contract on the Bitcoin ecosystem or Ethereum
These are some of my opinions on how Russia could benefit from Blockchain and cryptocurrencies much to the envy of the west. This does not hold against the West's i,e the U.S and Europe in general from making their own great attempts in adopting Bitcoin and cryptocurrencies. Overall i truly believe blockchain and cryptocurrencies will only solve world problems.
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