Did you see where Bitcoin announced their support of Ukraine in the wake of Russia’s military attack?
No, you didn’t. That’s because there’s no controlling entity behind Bitcoin that can do any such thing.
Same for Ethereum. Co-founder Vitalek Buterin acknowledged as much with a February tweet: “Reminder: Ethereum is neutral, but I am not.”
The neutrality of permissionless, decentralized blockchains, led by the king of cryptos, are proving to be a kind of international digital Switzerland in the wake of the polarizing Russia Ukraine conflict.
Sanctions involving limiting goods or services is one thing. But the decision of the West to leverage the international SWIFT settlement system, and the world’s reserve currency, the dollar, as weapons against Russia, is spurring an understandable response.
Russia upped the crypto profile this past week by announcing it would accept bitcoin as payment for its energy exports to Europe.
“If they want to buy, let them pay either in hard currency, and this is gold for us, or pay as it is convenient for us,” Pavel Zavalny, Chairman of the Duma’s (ie. the Russian Assembly’s) Energy Committee, commented during a press conference this past week. “The set of currencies can be different and this is normal practice, you can also trade bitcoins,” he continued.
The Geopolitical Implications of Cryptos Becoming Clearer
The Russia Ukraine war, and just before that, the Canadian Truckers Convoy protest, have brought the politics of crypto technology into sharper focus.
One political “power” is that they are agnostic. The code is open (or at least any code worth participating in). Many of the blockchains have no company to go after, and many of the app providers (not counting centralized exchanges and custodial investment platforms, etc.) don’t hold any assets of users.
As wallet software provider Nunchuck explained concerning a judge’s order during the Canadian protest, “We are a software provider, not a custodial financial intermediary.”
There’s a crucially important question at stake in all this: in a globalized economic system, should there be some minimum level of neutrality that helps assure that the entire world won’t collapse over weaponized finance?
The damage that’s already been done by trying to punish Russia with extraordinary sanctions is like COVID policy all over again: it’s very arguably doing more harm than good.
Perhaps more than anything, the unprecedented use of the existing modern international financial order crosses a line from which there is no going back.
The triggering conflict may well abate in some compromise, where Russia retains some Ukrainian territory and receives guarantees it was after before the conflict started. We can hope.
But from this point forward, many countries will be looking for alternatives to West-controlled international finance. China, of course, wants the digital Yuan to eclipse the dollar as its economy attempts to ascend to world leading status.
But cryptos are the wildcard offering an alternative to both China and the weaponized petro dollar.
Let’s see if the rest of the world, especially emerging regions like Africa, South America and Southeast Asia take a turn off a silk road, IMF and SWIFT dictated future, and continue to opt in greater numbers for a sector offering neutral wildcards.
For related articles, see “KYB: KNOW YOUR BLOCKCHAIN” (24 Aug 2021), “CHINA SEES CRYPTOS AS EXISTENTIAL THREAT” (28 Sep 2021) and “CANADA AND U.S. CRACKDOWNS DRAWING CRYPTO RESPONSE” (22 Feb 2022).