Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Crypto’s humanitarian side in the time of War
Vox | | Mar 1, 2022
Cryptocurrency is now a more mainstream part of the global financial system, which means that — for better or for worse — it’s inevitably a part of international conflict, too. This is on full display as Russian forces invade Ukraine. Millions of dollars in crypto have flowed in to support Ukraine’s army and hacktivist groups. Even the Ukrainian government is now soliciting donations in crypto and has already raised more than $15 million. Some Ukrainians are also turning to crypto as an alternative to Ukrainian financial institutions, which are limiting people’s access to bank accounts and foreign currency. In a scenario where governments are in chaos, it’s difficult to rely on traditional banks, and there’s fear of surveillance. So a relatively anonymous system where no government is involved is appealing.
“The fact that it can’t be frozen, the fact that it can’t be censored, and the fact that it can be used without ID is very, very important,” Alex Gladstein, chief strategy officer at the Human Rights Foundation, told Recode. “And they are why bitcoin is such an important humanitarian tool.”
See: Amid Russian invasion Ukraine’s official Twitter account posts pleas for crypto donations
Just how useful an avenue crypto is for people in crisis or organizations in need of donations is up for debate. You need a relatively sophisticated understanding of technology to use crypto, and if you weren’t already set up for it, the onset of a war might not be the moment to try to do it. Plenty of donations to Ukrainian groups are flowing in just fine using more traditional currencies.
Ukrainians are using crypto — but there are limitations
Right now, at least some Ukrainians escaping the country seem to be taking their crypto with them, which they hope to convert back into fiat currency once they arrive to safety. Others seem to be looking toward crypto as a way to store their wealth as Ukraine’s economy collapses; the country’s central bank has already suspended electronic cash transfers and is blocking Ukrainian citizens from withdrawing foreign currency. Trading on the Ukrainian crypto platform Kuna reached its highest level since May 2021 this past Friday.
“In Ukraine right now, you can download a bitcoin wallet open source — totally unconnected from your ID — and you can generate an address via a QR code or an alphanumeric string,” Gladstein explained. “You can paste that to me, I can send you $1,000, and it goes through in a few minutes.”
See: Pomp: We Should Not Normalize Economic War On Innocent Civilians
Using crypto in the middle of a crisis isn’t necessarily easy. For one thing, you need an internet connection and a working device. You also need to know how to use crypto, which has a steep learning curve and is something people aren’t going to be able to pick up quickly in moments of crisis.
“It might work for some people, but they need first to unfreeze their assets, transfer them into digital currency, and then manage to get out [of the country], which is actually the main problem right now,” Coppi said. “And then when they’re out, hope it hasn’t devalued too much.”
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