The world at large has been shocked by the Russian invasion of Ukraine following years of tension and months of escalation. The past weeks have seen large-scale attacks by Russian forces in Ukraine, along with formidable resistance from the Ukrainian military. At least for now, the response from the United States and other NATO allies has been largely economic.

The response has included both funding and supplies for Ukraine, along with drastic escalations in sanctions against Russia. Many of these sanctions have come in the form of private companies choosing to stop offering products and services within Russia and its most significant ally in the ongoing conflict, Belarus. This includes the suspension of operations by PayPal, Visa, and Mastercard, significantly impacting payment networks.

While these payment processors ceasing operations will have a considerable impact on the Russian people, what could be even more damaging for the businesses and government there is the partial SWIFT ban now in place.

SWIFT is an international network for bank-to-bank transfers that plays a vital role in modern finance. Seven Russian banks have been expelled from the SWIFT network, drastically reducing their ability to conduct international or even regional bank transfers. Two Russian banks remain connected, largely due to their role in handling payment for gas and oil exports that many European nations still rely on.

In any case, the economic reaction from the West is expected to have a significant impact on the Russian economy. While many in the West stand behind these measures, the fact that the financial systems we rely on every day can be put under such tight control highlights the need for decentralized cryptocurrencies in the modern world. 

Cryptocurrency Is Solving a Variety of Problems for Both Sides

The advantages of Bitcoin and other cryptocurrencies have become clear to both sides of the conflict, with cryptocurrency transactions now playing a larger role among both Ukrainian and Russian finances. The ongoing attacks by Russian forces have left much Ukrainian infrastructure inoperable. In such a situation, many of the conventional methods for transferring funds can’t be relied upon.

Cryptocurrencies are playing a major role in fundraising for Ukraine. There has been a significant international response from individuals and organizations in the West, with many donating to support the war effort. However, many rely on cryptocurrencies to safely and privately transfer these funds. In fact, some charities and non-governmental organizations are currently being targeted by malware attacks, raising serious security concerns.

There are also reports of various crowd-funding schemes like the Immediate Edge app which was recently used as a way to convince people who wish to donate to Ukraine, but eventually turned out to be a questionable trading software.

In Russia, many citizens are investing in Bitcoin to mitigate potential losses due to the falling value of the Russian ruble. In the days following the initial invasion on February 24th, the value of the ruble against the US dollar fell to just over half of its value days before. While it has since recovered some value, it is still down over 25%. By transferring funds to Bitcoin, Russians hope to weather any further devaluation.

The potential for Russia to use cryptocurrencies to bypass sanctions has been a major topic of discussion. Many politicians have brought up the concern that Bitcoin and other cryptocurrencies cannot be controlled by their governments. This is, of course, one of the primary features of cryptocurrencies. The fact that governments are truly unable to enforce sanctions through crypto transactions highlights the impact of decentralization.

Recent Events Highlight the Need for True Decentralization

However, there has been some headway in stamping out cryptocurrency use. While cryptocurrencies are decentralized, exchanges and other service providers are not. NFT marketplace OpenSea and infrastructure provider Infura have both blocked access to sanctioned regions.

The response from the crypto community has been largely negative against these developments, with many users outraged at the flagrant disregard for the principles of decentralization. However, neither of these bans actually involved blocking crypto transactions but rather denying access to third-party services. Cryptocurrencies themselves have remained unsanctionable, demonstrating just how secure and unbreakable they really are.