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Gate.io Blog Ukraine, Crypto, And War:A Bittersweet Experience

Ukraine, Crypto, And War:A Bittersweet Experience

19 May 16:13


Ukraine has one of the most significant crypto holders and enthusiasts globally.

According to the global ranking, it was easy for the citizens to transact using cryptocurrencies.

The effects of war are brutal and have a lasting impact on the economy of all nations involved.

At the peak of the war, the Ukrainian citizens had to make panic buying, withdraw fiat in excess, and transfer their savings to other currencies.

These activities almost paralyzed the economy if not for the government’s swift response to fully embrace cryptocurrency.

Donations were solicited for and received in cryptocurrencies to help cater to the immediate needs of the fighters and citizenry.

The Ukrainian government went into partnership with Micheal Chobanian to improve transactions and scalability in cryptocurrency.

After a while, the government placed a temporary ban on exchanging Russian currency for Crypto.


Before the war between Ukraine and Russia started, Ukrainians had fully embraced cryptocurrencies for their daily transactions and exchanges.

In a global index report by Chain Analysis, Ukraine is ranked fourth among the countries that adopt cryptocurrency globally. Ukraine is governed by a young team of techno-natives building a block-chain friendly economy.

When the Ukraine-Russia conflict started, the Ukrainian government's response to war dynamics was swift. Affected institutions such as the financial institution would cripple the economy and make life unbearable for the citizens.

Alongside their foreign counterparts, the government had to swing into action and divert fiat-based transactions to the blockchain network.

At this juncture, we shall identify how Crypto influenced the Russian-Ukrainian war and helped cushion the effect of the invasion.


How Crypto Has Influenced The Ukraine War


Ukraine is currently under attack by Russia, and the War started on the 24th of February 2022. According to mainstream media reports and the personal account of President Zelensky, the Russian attack is on every facet of Ukraine.

However, the country has managed the crisis considerably and cushioned its economy.

How is this possible? The embrace of Cryptocurrency.

It all began on the second day of the invasion when Ukraine's digital transformation minister ordered his deputy to immediately set up a blockchain wallet.

Within a few days of the war, there were sanctions on the use of the fiat. Queues at cash points and supermarkets continued to increase in Kyiv. It was a matter of time before the limited banks ran out of fiat supply, and the economy would come to a standstill.

The Ukrainian government has established legal structures to give the crypto market a strong foothold. Some of these structures include making the National Bank of Ukraine and the National Securities and Stock Market Commission regulators of the market.

The situation necessitated finding a viable alternative to fiat, and the best option was to adopt cryptocurrency.

The Government started by making the country's crypto wallet available to the general public via Twitter. Subsequently, the government launched an official aid website that directly allows you to donate nine crypto tokens: Bitcoin, Ether, Solana, Tether, and Dogecoin.

Since the Ukraine-Russian war started, the government has received over 100million dollars worth of cryptocurrency.


The Impact Of Cryptocurrency Donation On Ukraine


Shortly after the war started, people began to panic. Many citizens wanted to receive transfers from people and make enough purchases in supermarkets with their bank cards; others wished to withdraw from their bank savings.

There were restrictions on the banks in Ukraine, and wire transfers were taking longer than usual. The best alternative was the use of cryptocurrency.

The Ukrainian government immediately signed an agreement with Micheal Chobanian, the founder of Kuna, a cryptocurrency exchange developer. Chobanian also doubles as the President of the Blockchain Association in Ukraine.

The partnership has helped scale the government's crypto effort with exchange FTX and launch the Ukrainian stacking platform, Everstake.

The Ukraine government said it had spent half of the crypto donations on bulletproof vests, helmets, food, and medical supplies. There are plans and agreements underway to ensure military suppliers can receive payments directly in cryptocurrencies and, in turn, supply non-lethal military equipment.

The Government stated that cryptocurrency has helped them meet the country's immediate needs towards curtailing the ongoing war.

In addition, Polusukhn said Unchain, a blockchain development company, is working towards launching a crypto Automated Teller Machine (ATM) card. This ATM card will allow those with crypto tokens to buy goods and services directly.


The Crypto Ban By Ukraine


The Ukraine Government swiftly adopted the use of Crypto; why the sudden ban?

The Ukraine Central Bank announced that no one should purchase cryptocurrencies with the Hryvnia currency. Since the war began, the report states that about $1.7 billion was transferred out of Ukrainian banks in March and $900 million in early April.

These transfers will grossly affect the economy and the strength of the Ukrainian currency. Therefore, the ban was placed to reduce the money flow out of Ukraine.

The ban is temporary, and those who want to change their fiat into cryptocurrency can use other currencies such as dollars. There is also a restriction on the total amount of dollars you can spend per month.

The limit is $3,300 or 100,000 UAH per account. The government opined that the restrictions were necessary to forestall the currency's collapse to the Russian ruble.


Conclusion


No country deserves to suffer an unjust invasion from a superior nation. War is never a good adventure.

Lives and properties have been destroyed. The Ukrainian economy is in a state of comatose. Albeit, The cryptocurrency is at their rescue.

Those who have their hard-earned money in hryvnia (Ukraine currency) and cannot change it to a digital asset would eventually lose it when the war comes to an end. This, alongside other hardships that the citizens face, is a bitter experience.

On the other hand, cryptocurrency helps keep the assets intact until they are needed. The cryptocurrency also helps make global transactions and receive aid and support across the globe.

By the time the war ends, almost all Ukrainians will fully embrace crypto tokens, as the impact during the downtimes can not be underestimated.



Author: Valentine A., Gate.io Researcher
This article represents only the researcher's views and does not constitute any investment suggestions.
Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
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