ambujsaxena05
April 5, 2023
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In the recent history, as a generation, we have witnessed various political conflicts- some involving change of regimes while some involving border clashes and wars! As we enter the 400th day of Russia Ukraine war, I choose to take the side of peace however, there are certain trends that need attention and they may interest you too! Afterall, sometimes, the destructive nature of conflict can make it ripe for attention, discussion, and problem-solving!In this era of Globalisation, countries tend to depend on each other for various tangible and intangible resources. This makes political conflicts appear all the more unnecessary and illogical.
However, for some industries, such political upheavals present a disguised opportunity. In this post, let’s have a look at how Cryptocurrency has impacted the Russia- Ukraine political conflict and later on, we shall also see how Emerging technologies have impacted political conflicts in the past.
What is Cryptocurrency?
Just a quick recap of Cryptocurrency basics:
Decentralised or No central authority
In traditional fiat currencies like Rupee, Dollar, Euro, Dirham etc, central authorities and banks control the financial system. However, cryptocurrencies such as Bitcoin and Ethereum help a user bypass the processing and validation of such transactions via a distributed and open network.
Irreversible and Immutable
Transactions cannot be changed once they are recorded on the blockchain.
Two transacting parties do not need to identify themselves when transacting with cryptocurrency. Therefore, users can create anonymous digital identities and digital wallets to transact and still be able to securely authenticate their transactions.
Deflationary by nature
Fiat currencies that central banks can issue and/or print are based on present economic scenario. Inflationary nature of these currencies causes the decrease of value of currency over a period of time. However, many cryptocurrencies have a pre-determined supply of the cryptocurrency at the time of creation. Limited supply of currency causes them to become Deflationary in nature as an increase in demand of the cryptocurrency will cause a corresponding increase in their price.
What is the objective of using cryptocurrency over Fiat Currencies?
When it comes to transfer of value, Cryptocurrencies were preferred in key scenarios of the war. Due to traits of Cryptocurrency already shown earlier, transfers are executed virtually instantaneously, securely and directly delivered from one party to another without the need for a transactional intermediary, such as a central bank. However, fiat currencies require a central bank for approvals!
Impact of cryptocurrency on Ukraine-Russia conflict
I wish to clarify at the outset, that neither me nor Social Buzz, supported an armed political conflict as it has forced millions to abandon their homes, shelling of major cities, and laying down the lives of innocents. Through this blog post, I intend to analyse the extent to which Emerging technology or Cryptocurrency has affected the war related efforts. At the outset, I wish to specify the military strength of the 2 countries.
According to globalfirepower.com, in annual survey, Russia is ranked #2 and Ukraine is ranked #15 out of 145 countries on account of PowerIndex.
You might be wondering why would anyone donate for a cause in Crypto when they have the option to donate in a widely recognised fiat currency?
The potential benefits and risks associated with crypto includes evasion of sanctions, cybercrimes and market volatility. Even though, fundraising donations in Crypto pales in comparison to funds raised via Fiat currency however, the Crypto fund raising amounts are worth analysis!
On comparing the Pro-Russia and Pro-Ukraine donations via Cryptocurrency, we came across some interesting stats:
Thus, Pro-Russia groups were able to raise USD 5.4 million while Pro-Ukraine groups were able to raise USD 212 million in Cryptocurrency.
The breakup of Pro-Ukraine donations in Cryptocurrency are as follows:
Why Cryptocurrency donations to Pro-Russia groups are under the scanner?
As we saw above, total pro-Ukrainian crypto fundraising since the war began, tops pro-Russian funding by 44 to one. However, the Cryptocurrency funds raised by Pro Russia groups have raised suspicion! According to 2023 Crypto Crime Report, there were USD 456 million as ransomware payments. In 2022, majority of hackers are believed to be based in Russia.
Moreover, Conti, a Russia-based infamous Ransomware group extorted USD 66 million in 2022. Later, Conti alleged its allegiance to pro Russia efforts in the war.
KillNet- Another notorious group Pro Russian group has targeted Healthcare organisations. According to Chain Analysis, KillNet has used it’s platform to advertise fundraisers for purchasing military equipment for Russian military. Due to the above reports, pro-Russia Crypto donations have come under suspicion! Although, it is believed that many such reports are considered biased however, I am only presenting report findings.
Precedents of Usage of Emerging technology in Political conflicts
Arab Springs
As for recent history, the Arab uprisings are most reminiscent of the wave of youth-generated political unrest. Political conflict erupted in the Middle East in late 2010. It began in Tunisia and then spread throughout the region in 2011 via Egypt, Bahrain, Yemen, Libya and Syria. Interestingly, the protests in Tunisia amassed massive scale as a Twitter user captured a commoner who committed suicide by self immolation in rebellion against the dictatorship. Once the user uploaded the video on Twitter, it attained virality in no time. Thus, it caused a huge protest which resulted in over throwing the government. This had a multiplier effect as people in other countries in similar circumstances followed suit! This widespread political upheaval is termed as Arab Springs.
Sources: https://blog.chainalysis.com/reports/russia-ukraine-war-cryptocurrency-one-year/ https://www.globalfirepower.com/countries-comparison-detail.php?country1=ukraine&country2=russia file:///D:/IMP%20Data/Downloads/Arab-American-Media-Report-1.pdfhttps://www.pewresearch.org/journalism/2012/11/28/role-social-media-arab-uprisings/#_ftn5 https://www.usip.org/sites/default/files/resources/PW80.pdf https://www.weforum.org/agenda/2023/03/the-role-cryptocurrency-crypto-huge-in-ukraine-war-russia/ https://mwi.usma.edu/crypto-at-war-how-digital-currencies-will-shape-the-future-of-conflict/ https://medium.com/the-capital/key-characteristics-of-cryptocurrency-and-why-do-they-matter-to-you-5f33e483a40f
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