Up until Saturday February 26th, the use case for cryptocurrency as a geopolitical tool has been a mix of hypothetical, erratic, and at times criminal. That all changed with one tweet. The Ukrainian government tweeted out a request “[n]ow accepting cryptocurrency donations. Bitcoin, Ethereum and USDT.” A European country at war was requesting cryptocurrency to fund its defense. Regardless of whether any such donations help change the course of the tragic events unfolding in Ukraine, this is crypto’s geopolitical watershed moment.
For much of the past thirteen years, since the world’s first cryptocurrency Bitcoin launched, the world has been able to dismiss cryptocurrency. Invented as a means to digitally transact directly (peer to peer) without the need for a central counterparty, the technology has ardent evangelists and critics, as does most frontier technology. The past few years have seen tremendous economic activity surrounding the industry and mainstream adoption as seen through this year’s four Super Bowl Commercials run by crypto companies. The total value of all cryptocurrencies worldwide is approaching $2 trillion. If Crypto was a country, it would have an economy stronger than all but 9 countries on Earths. These indicators of economic success paired with a boom in mainstream interest in blockchain use case NFTs (non-fungible tokens) have opened the industry to millions of new entrants. But short of a few countries who have dabbled with the idea of their own digital token, the political implications of the technology have largely been ignored. Those days are numbered.
They say cash is king, but recent events suggest it may have to share the throne. People need a way to exchange with one another as stable society conditions deteriorate, but those deteriorating conditions make it hard to access cash. Last week for example, as the invasion of Ukraine began, the National Bank issued limits to how much cash people could withdraw. In 2015, Boston University researchers explored the use of bitcoin in conflict zones and, according to Professor Daivi Rodima-Taylor, found potential that “digital currencies as a technology offered a means to enhance what is already a diverse ecosystem of remittance methods.” This was not a surprise finding – as early as summer 2011, the organization WikiLeaks solicited donations in Bitcoin to continue funding operations after it faced in the words of its founder Julian Assange an “extralegal US banking blockade.” Stories abound of refugees and dissidents around the world, such as during the Syrian crisis, using cryptocurrency to store their savings as they sought refuge in other countries.
What does it say about the value proposition of cryptocurrency that in the midst of a political and humanitarian crisis the government of Ukraine turned to cryptocurrency donations to help their cause? For one thing, the supposed veneer of illegitimacy surrounding cryptocurrency has been shed. In the direst of situations, the Ukrainian government has been looking for help wherever it can get it, and the ability of individuals around the world to send cryptocurrency to a war zone was near the top of the list. According to Ukrainian Minister of Digital Transformation Mykhailo Fedorov, total donations in cryptocurrency to the Armed Forces of Ukraine grew to $ 12.7 million in just two days. This is the first time that cryptocurrency has been front and center in a geopolitical event this significant. The future remains very much uncertain, but cryptocurrency is now part of the geopolitical conversation moving forward.