Crypto conflict unfolds in Ukraine
As the Russian-Ukrainian war enters its third week, much of the world is using digital technologies to watch it unfold. Behind the physical soldiers in uniform are invisible digital algorithms at work, from artificial intelligence to the movement of money, including cryptocurrency, or “crypto”.
Less visible than tanks, yet more sophisticated, a parallel war is unfolding – a digital currency battle between Russia and the West, as a virtual digital currency market has developed in recent years, individuals and countries availing themselves of new ways to move money. without leaving a trace.
Modern warfare means the loss of lives as well as treasures in new forms such as virtual currency.
The cryptocurrency market value surpassed $2 trillion in 2021 and is expected to continue its volatile growth. What is just a decade-old money transfer system turns out to be a major source of commerce and, unsurprisingly, it has slipped onto the battlefield.
Many of us have heard of Bitcoin, but that’s just the tip of the crypto iceberg. Right behind Bitcoin is Ethereum and a range of smaller cryptocurrencies.
As the size of the crypto market increases, so do its detractors and participants, including Russia and Ukraine, which are monetary as well as military adversaries. This raises the question of whether increasing sanctions against Russia will do what we hope they will.
Russian President Vladimir PoutineVladimir Vladimirovich PutinTrump rips Biden amid Ukraine conflict Bipartisan group of senators meet with officials, visit refugee sites in Poland Republicans seize on rising gas prices amid Ukraine conflict MORE undoubtedly anticipated the freezing of its assets, severe sanctions and punitive actions such as the repression of its capacity to exchange goods and services and carry out banking transactions via the international system. To avoid sanctions and international controls, he invested in digital currency, a kind of electronic ruble.
Ukraine, also aware of the power of digital currency, has invested heavily in it. Ukrainian President Zelensky went so far as to advocate for electronic donations for the war effort and reportedly raised $42 million in crypto donations, including digital artwork – something most of us don’t. can’t even imagine.
But how to ensure that only one party to the conflict benefits from cryptocurrencies? Can we guarantee that all these sanctions, which can lead to an increase in the price of a gallon of gasoline, will work?
The most difficult question facing Russia is how well it can resist the economic pressures imposed by the rest of the world in opposition to its illegal invasion of a sovereign country. With all the focus on traditional banking and Russia’s expulsion from the SWIFT financial system, we tend to forget about the dark, almost parallel world of crypto, where transactions are harder to track, which makes it appealing to those, like ordinary citizens, enduring war. , who might not be able to access their bank accounts, but also attract criminals, drug lords and those seeking to avoid detection when transferring money.
Direct money transfer, as many of us do with Venmo or PayPal, is even more sophisticated at the level of large digital currency movements which also rely on blockchain algorithms which can make it difficult to trace sources and recipients. The United States and Europe are aware of Russian interest in cryptocurrencies. Last year, the US Treasury Department warned banks and financial institutions against the use of digital currency transfers by Russian oligarchs and state actors seeking to evade sanctions. But getting multiple countries to share information and “red flags” on Russian assets can be difficult. With regulations for the entire crypto system constantly changing, it is a game of cat and mouse to curb the flow of unseen transactions.
Whether it’s bullets, blogs, or Bitcoin, modern warfare is evolving, and winners and losers can depend on how technology is used on the battlefield. As observers of this war, our lives will be affected, whether it is the price of fuel or the freedom to use cryptocurrencies.
Some may argue that, even at the risk of empowering crypto-criminals or allowing dictators to avoid punishment, we must retain the ability of individuals to move money using the fastest technologies available.
Ultimately, what we think of virtual technologies may not be relevant because they tend to override human judgment. What we need to do is give the best weapons to the good guys – in this case Ukraine – and do our best to stop the war before it leaves us all unable to live in safety.
Tara D. Sonenshine is a former United States Under Secretary of State for Public Diplomacy and Public Affairs.