Cryptocurrency’s Role in Helping the Tumbling Ruble & The Future of Money

Which Cryptocurrency Will Come Out on Top: Bitcoin or Ethereum?

The Ukraine-Russia war and the consequent use of cryptocurrency by both sides to overcome their own set of challenges seem to demonstrate what these digital coins are capable of doing. Russia has been hit by massive economic sanctions since it sent its troops into Ukraine. Many in the U.S. administration and elsewhere in Europe believe that the Russian government, its oligarchs, and investors could use Bitcoin, Ether, and other digital currencies to overcome some of the impacts of the sanctions.

In this article cryptocurrencies are mainly decentralized; they are seen to derive their value from different sources such as production cost, supply or demand, exchanges availability, governance, competition, and regulations.

While the West is looking for ways to curb these crypto efforts of the Russian polity, Ukraine has been at the receiving end of the benefits offered by crypto. The EU-aspirant nation has so far raised $100 million in crypto funds from all over the world as support for its war effort.

The Impact on Ruble

On the other hand, the crumbling ruble brings a lot of pain to the Russian economy and population. National currencies, such as the ruble, have become the topic of discussion in recent times. How do decentralized and non-fiat currencies such as Bitcoin, Ether, and other altcoins provide solutions in such scenarios?

How do blockchain technology and related digital revolution transform finance and currencies? What do the sanctions on Russia mean and what is the impact on money, such as ruble? Find out the answers to these questions here.

The U.S. and its allies have implemented many sanctions against Russia. The world’s largest country by mass no longer has access to the global financial markets. It has even lost access to its foreign exchange reserves stored in dollars. All this has shown that the U.S. dollar is still the dominating force in global finance.

Industry experts see cryptos to be unlikely to cause any potential challenge to major fiat currencies including the U.S. dollar. What Bitcoin and other cryptocurrencies have so far failed to prove is acting as effective mediums of exchange for conducting transactions. However, they have demonstrated their worth in the following ways:

  • Bitcoin has shown itself to be a speculative financial asset
  • The blockchain technology behind Bitcoin has made it simpler to develop newer financial products and services
  • Everyone now has easier access to these financial products and services, including those from low-income households
  • Digital payments, both across the borders and within countries, have become simpler, faster, and more affordable

Cryptocurrencies and the technology behind them are expected to benefit businesses, importers, exporters, consumers, and economic migrants.

Can Crypto Help Circumvent Sanctions?

It is expected that Russia may have already taken steps to circumvent these sanctions by using Bitcoin and other digital currencies. But how may they be doing that?

The condition of Bitcoin and other cryptos in the current scenario can be summed up in the following sentence: Cryptocurrencies do not yet have the scalability to overcome financial sanctions at the level of a country’s economy. There is a need to be able to convert cryptos into global currencies for processing international payments and this need has not yet been realized.

Putting it in simple terms, the Putin administration cannot yet rely on Bitcoin to overcome the West’s sanctions. This is because international payment transactions require settlement in fiat currencies such as USD and EUR. Besides, cryptos don’t have much influence in protecting a nation’s currency from falling in value compared to major reserve currencies. This is because such values are based on the events in the traditional financial markets.

On the other hand, cryptos may help Russia’s citizens. They may see Bitcoin and other digital coins as better alternatives than the ruble. BTC, ETH, and other crypto coins may end up receiving a large volume of deposits from the country’s banking system. It may even mean that crypto may become a medium for the flight of capital out of the country.

Future of Money

According to many financial market experts, the use of physical currency will not last much longer. Digital forms of payments have become the standard in most developed and developing nations. At the same time, central banks in many major economies are seeking to issue their own version of digital currencies, backed by their national currencies. Examples include China, Sweden, Japan, and India. Even the recent executive order by the Biden administration seeks the Fed to explore the feasibility of an official digital currency in the U.S.

It is also expected that large corporations could issue their unique stablecoins in the near future. These coins, backed by U.S. dollar reserves, could be used for making payments both within and across borders.

Overall, the Ukraine-Russia situation hasn’t yet revealed the full scale of capabilities of Bitcoin and other cryptos. More time will be required to find out how the Russian government, oligarchs, and its population used digital currencies to get around the financial challenges they are currently facing.

Written by Frederick Jace

A passionate Blogger and a Full time Tech writer. SEO and Content Writer Expert since 2015.

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