Bitcoin donations have been flowing ever since the Russian-Ukrainian conflict.
Despite cryptocurrency’s increasing popularity, gold continues to be the ultimate wartime asset.
The shockwaves created by Putin’s invasion of Ukraine shocked the entire world. Bitcoin is being sought by investors to protect their wealth from conflict, but despite its shining qualities, it may be second to gold.
Bitcoin War Proof?
Bitcoin was created to change the nature of transactions and, as such, earned the title of a store-of-value. It was revolutionary because it represented the ideal of decentralization. The hard cap of 21,000,000 Bitcoins was a landmark innovation. It was not under the control of Central Banks, and seemed to be indestructible from macroeconomic factors.
Combining these attributes made Bitcoin an ideal asset that can withstand war. As Bitcoin’s value rose, institutional and retail investors alike flocked to it, achieving new heights. Bitcoin reached $68,789 in November 2021. The rest of the market struggled to cope with the inflationary effects that were similar to 1982 figures.
Funds are transacted in BTC as Russia’s invasion of Ukraine progresses and Tradfi is limited by war. Come Back Alive, an NGO in Ukraine that supports the army and has raised $400,000 in digital assets, while the Ukrainian Cyber Alliance raised more than $100,000 in BTC.
While the US and other countries may consider imposing harsh sanctions against Russia, experts believe that the use cryptocurrency will reduce the severity of the sanctions. European countries want Russia to be excluded from the SWIFT system. This is the main international payment network that facilitates smooth cross-border transactions. The Russians’ decision to switch to cryptocurrency in response to sanctions would be the first time that an aggressor nation uses Bitcoin and other cryptocurrencies in conflict.
Bitcoin Falters
To the dismay and surprise of investors, Bitcoin fell below its one-month lowest point to $34,000 at the start of the invasion. The decline in Bitcoin was mirrored by other assets. This led pundits to compare Bitcoin’s fate with the stock market.
Gold was the silent winner amid all the chaos. The age-old store of value rose to a peak of over $1,900 in 15 months, with indicators suggesting that it could soar to $2,000. Bitcoin critics latch onto this metric, saying “Bitcoin’s not digital gold but digital fools gold.”
Bitcoin’s form dip is perhaps temporary and the largest cryptocurrency will find its feet in chaos to shine as “war-proof asset”, as its maximalists claim.