The value of bitcoin has risen 23% over the past seven days. And other cryptos are following suit. The reasons for this rebound are to be analyzed on the side of Ukraine 

Collateral effect of the conflict between Russia and Ukraine: bitcoin and all cryptocurrencies are gaining in popularity and value. Currency of international solidarity, safe haven for the besieged as well as for Russians under economic sanctions and freezing of their fortunes, or currency of exchange for transactions when the banking system is collapsing, bitcoin is displayed everywhere .

The Ukrainian Minister for Digital Transformation, Mykhailo Fedorov, also Deputy Prime Minister, came out very quickly on the social network twitter to indicate that the Ukrainian state accepts financial support in crypto-currencies: bitcoin, ether, polkadot, even dogecoin. The country invaded by Russian soldiers has taken the turn of the blockchain to seek international financial solidarity. We would have already exceeded 30 million dollars in crypto*.

Crypto donors will be rewarded

To the point perhaps of transforming these donations into investments: the Ukrainians announce that the donors will be rewarded thanks to an airdrop, that is to say the delivery of an asset to all those who have given. To see in what form when the country will be refloated.

For the local population in Ukraine, bitcoin may become the means of financing transactions in the short or medium term, when the cash will be exhausted and the bank card network will be interrupted. Alongside barter and self-help, cryptocurrencies could become the only way to obtain goods or services before long.

On the Russian side too, the conflict risks becoming an accelerator on the way to the generalization of bitcoin. To defend themselves against exclusion measures from the SWIFT, visa or mastercard networks, bitcoin is a tool that the wealthy oligarchs seek to seize in the face of the collapse of the ruble. The Minister of Economy, Bruno Le Maire did not fail to make it known that “the European Union is taking measures on crypto-currencies, which must not be used to circumvent financial sanctions.”

To anticipate against any external threat

Lack of anticipation on bitcoin, the panic of Russian fortunes may in passing increase the cost for those who want to buy bitcoin now. “Morality: the worst-case scenario is never to be excluded. Building up a small bitcoin stash is a good idea for anyone on the planet, as long as the situation is calm,” remarks one cryptocurrency watcher.

Bitcoin is also used by Russian individuals to defend themselves against international sanctions but also against the restrictive measures of their own government: blocking of withdrawals to avoid a bank run, taxation on deposits, etc. Russian citizens who had assets in Cyprus have already experienced a comparable episode in 2013 when the government wanted to tax bank deposits to bail them out. Some had exited the system by changing the local currency for bitcoin.

The dramatic episode that Ukraine is going through today demonstrates the exposure of national monetary ecosystems to external threats and should perhaps trigger crisis case studies at the Banque de France or in a few French companies to reflect on measures to protection in case of conflict. If France does not really like to consider this scenario, countries that are dollar-dependent or at risk of being subject to sanctions may consider it more quickly. On the side of South America for example.

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