Dapp discovery and analysis platform DappRadar has released a detailed report detailing how the war between Russia and Ukraine has affected the crypto industry. It argues that blockchain-based solutions “could play an important role” as the war continues, especially in light of global sanctions and asset freezes against Russia.
macroeconomic picture
The report begins by assessing the economic roles of both Russia and Ukraine in the world. While Russia is one of the world’s most important energy and commodity producers, Ukraine is a major source of wheat. So far, half of Russia’s oil has been consumed by European countries and fueled a third of Europe’s total oil consumption.
Today, Russia is banned from exporting its oil to the United States, and Europe is reducing its reliance on the country’s natural gas by 66%. This has led to an increase in oil prices, which the report predicts will have an impact on bitcoin and other proof-of-work blockchains.
Meanwhile, Russian banks have also been sanctioned by the West, and have accumulated about 65% of the country’s $650 billion in reserves. The nation has been kicked out of the SWIFT payment messaging system, and several payment providers including PayPal, Visa and MasterCard have also stopped serving Russia.
As such, Dappradar believes that the blockchain ecosystem can provide a payment gateway for millions of Russians and Ukrainians who are deprived by other means. It specifically mentions the use of stable coins, which can be used as a hedge against the high inflation seen in Russia today.
In fact, bitcoin payments company Strike recently brought a Tether compatible remittance service to Argentina to serve a similar purpose.
With regard to Ukraine, the crypto community has already used digital assets to provide tremendous support to the country. Its deputy prime minister is highly engaged with the community on Twitter, asking for donations in everything from bitcoin to Polkadot, to Dogecoin.
The starring role of Crypto
The report acknowledges that the demand for cryptocurrency has been increasing significantly in both Ukraine and Russia since the war began. Bitcoin was bought in Russia with three times the ruble, while in Ukraine it almost doubled. Dappradar claims that this has helped bitcoin find price support around $38,000 despite a month-long bearish trend that the crypto market is stuck in.
Overall, the firm argues that the consequences of this situation will prompt people to seek a more verifiable, decentralized financial system.
“This scenario will create even more mistrust in the centralized banking system, paving the way for increased adoption and recognition of digital assets and cryptocurrencies,” the report said.
Credit Suisse shared similar expectations in an analysis last week, in which it argued that inflation is coming to the US and that bitcoin will benefit from the current turmoil.
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