The role (and power) of blockchain and crypto in times of crisis
The Ukraine-Russia conflict has highlighted the significance of international financial relations; where the papers are not focused on the frontline, they are focused on the measures taken by countries to either provide aid to the impacted or displaced, or penalize the aggressors. Never has it been more clear that finances and war are connected.
As in all conflicts, there are victims on both sides. Individuals that have had their choices limited by factors beyond their control; and it is to this that blockchain – and, by extension, cryptocurrency – provides a solution.
Where centralized economic institutions collapse, decentralized solutions can prevail. Crypto work solutions, such as HUMAN Protocol, can provide a censorless, unencumbered way for people to earn. In times of crisis, autonomy is more important than ever.
There are many likely reasons for crypto being the preferred means of donation. Key among them, however, is that it provides a fast, secure, and censorless way to receive funds.
What is particularly interesting is the actual use of cryptocurrency by people in Ukraine. Just as in Libya, Syria, and Palestine, Ukraine is seeing a rise in the use of crypto during conflict. Vox reports:
“Some Ukrainians are also turning to crypto as an alternative to Ukrainian financial institutions, which are limiting people’s access to bank accounts and foreign currency. In a scenario where governments are in chaos, it’s difficult to rely on traditional banks.”
It’s safe to assume that the intention is to turn crypto into fiat as soon as possible, to be used for its intended purpose, whether for survival, military, or as a hedge against fiat downfalls if the economies impacted by the conflict collapse. But this is only a demonstration of the appeal of crypto; there are, as of now, limited work solutions within crypto, but this is a world we are making possible at HUMAN. The benefits of crypto, demonstrated by the conflict, can extend to work solutions.
Even in conflict, work – and paying for work – is a requirement. People need to make a living; and, on the other end, there is still a requirement – locally and globally – for work to be accomplished. Blockchain solutions, such as HUMAN Protocol, provide a real solution for those looking to earn outside of the traditional, and problematic, financial systems, while providing those who require work to be done a seamless way to request it.
Crypto has two important functions in relation to navigating through the sanctions on Russia. Firstly, there is a fear that sanctions could be bypassed with crypto. And while top exchanges have resisted calls to implement a blanket ban on users based on their geolocation, it must be emphasized that these exchanges will continue to ban and freeze accounts of sanctioned individuals and entities. Blockchain’s neutrality is one of its essential assets; that it exists for all, and cannot be singularly controlled by anyone. Yet the alignment with international legal sanctions does bring crypto above complete neutrality – while it is broadly neutral, it can no longer be thought of as lawless.
That the exchanges are refusing to ban users based on their geolocation is important. Binance told the BBC:
"Crypto is meant to provide greater financial freedom for people across the globe,” and that, any unilateral ban would "fly in the face" of crypto’s reason for being. Crypto remains open and operational for the ordinary people of Russia; and it is they, too, who have their freedom, literal or economic, curtailed by the ruling system, and the sanctions levied against it, who can benefit from a decentralized payment solution.
Many will view this conflict – and the potential “escape hatch” of crypto for Russian sanctioned persons – as a reason to criticize crypto. What we are seeing, however, with crypto’s use is simply an inevitable consequence of expanding human capabilities.
The comparisons between blockchain and the Internet have circled for years. Here, the comparison is also apt; the Internet itself is a fairly neutral tool that can be employed in ways that are both creative and destructive. The Internet gave us new ways to donate and fundraise. It gave small businesses ways to scale; large businesses scope to dominate; and enabled vast quantities of black market activity. The Internet broadly facilitated an increase in human capabilities – some “good”, some “bad”.
Crypto is much the same: a double-edged sword, or more simply a set of tools that can be used to different ends. Alex Zerden, a former Treasury Department official under the Obama and Trump administrations, makes a similar point with regards to the dollar:
“US dollars are used for a lot of really great economic activities. It’s also used to buy drugs and weapons and, you know, engage in human trafficking, right?”
Its use here will undoubtedly set a precedent for future conflicts and crises. Blockchain technology is capable of serving both the margins – those locked out of traditional systems, such as the unbanked or the victims of conflict – and the mainstream.
There remain doubts, of course, but it’s too early to make a sweeping statement about the role of crypto as “good” or “bad”; all we can say is that it is fulfilling its function as a censorless mechanism for the transfer of value – that function can expand, too, to the exchange of goods or services, including work. As with the Internet, and the dollar, its destructive use is inevitable, but should, by no means, obscure the real benefits it produces.
The HUMAN Protocol Foundation makes no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information contained here. Any assumptions, opinions, and estimations expressed constitute the HUMAN Protocol Foundation’s judgment as of the time of publishing and are subject to change without notice. Any projection contained within the information presented here is based on a number of assumptions, and there can be no guarantee that any projected outcomes will be achieved.