‘I’ve never paid with crypto before’: How digital assets make a difference amid a war

The ongoing conflict in Ukraine has become a stress test for crypto in many tangible ways. Digital assets have emerged as an effective means of directly supporting humanitarian efforts, and the crypto industry, despite enormous pressure, has largely proved itself a mature community — one ready to comply with international policies without compromising the core principles of decentralization.

But there is another vital role that crypto has filled during these tragic events: It is becoming more and more familiar to those who have found themselves cut off from the payment systems that had once seemed unfailing.

Traditional financial infrastructures don’t usually work well during military confrontations and humanitarian crises. From hyperinflation and cash shortages to the destruction of ATMs, crises can disrupt the banking system’s ability to function and threaten the money supply for millions of regular individuals.

Cointelegraph spoke with some of the people who experienced these disruptions firsthand during the first days and weeks of the war. Some of them didn’t know much about crypto and had to learn fast, while others were lucky to have had some experience with digital assets that they could fall back on.

Some of these people are from Ukraine and have directly experienced the struggles of war, while others are from Russia and had to leave the country as their ordinary lives collapsed overnight. Their stories reveal that when the world comes crashing down, it is ordinary people for whom crypto provides the last line of support, not the corrupt elites.

“Crypto was originally created so that no single government or individual could control it”

Viktoria Fox is a Ukrainian-American entrepreneur who is the founder and CEO of Polaris Capital, a cryptocurrency mining company. Her parents moved from Ukraine to the United States during the tumult of the post-Soviet Union 1990s. When the war broke out on Feb. 24, her U.S. family started receiving uneasy phone calls from their relatives in Ukraine. As Russian troops advanced into the country, the National Bank of Ukraine immediately stopped the circulation of all securities and limited cash withdrawals, creating a nationwide frenzy.

Although the central bank claimed that banking and financial systems remained “resilient” following the Russian invasion, Fox’s relatives told a different story from the ground:

“What I’ve been told is that banks are closed and all ATM machines have no more cash. After two weeks of war, my relatives, like most families, were completely out of cash.”

Since then, Fox has been sending them Bitcoin (BTC), which started to function as a cash substitute for vendors and fellow citizens — a means to pay for almost anything from food to taxis. Viktoria’s uncle used Bitcoin to compensate a driver who traveled six hours to get him from Kharkiv to the Western part of the country.

In Fox’s experience, most Ukrainians prefer to transact via established global exchanges such as Coinbase and Binance, though some rely on Ukrainian exchanges as well.

“I think it’s important to remember that crypto, particularly Bitcoin, was originally created so that no single government or individual could control it,” Fox noted. “While it would be tempting to punish the ‘bad’ Russians and reward innocent Ukrainian civilians, it defeats the whole purpose of a decentralized currency or asset.” She doesn’t believe that tightening government control over crypto would help ordinary people during this or any future war.

“For me, as an anarchist, it was a matter of ideological choice, not of comfort”

Until several weeks ago, “Andrey” lived in the Russian city of Saint Petersburg, where he was born. Andrey is a front-end developer and has some professional experience with blockchain platforms. “I probably couldn’t write a smart contract, but I sure know how to use crypto in daily financial operations,” he said. “I have experience withdrawing USDT here and there, and I never did it through bank cards. For me, as an anarchist, it was a matter of ideological choice, not of comfort.”

As Andrey headed for Berlin on the fourth day of the war, the entirety of his belongings consisted of a laptop, a pair of t-shirts and a hardware wallet holding some hard-earned stablecoins:

“I had to use them to buy plane tickets to travel inside Europe. The last thing I managed to do with my Visa card was to rent a flat on Airbnb for two weeks. I was lucky enough to have a bunch of friends in Europe, and now they help me to pay with cards when necessary. I just send them the coins.”

In the long run, Andrey admitted that he still needs fiat to buy groceries and other necessities. He has yet to learn the peer-to-peer withdrawal tools available in Europe. Still, he regards the decision to get a hardware wallet for crypto as one of the smartest moves in his life. “It’s not like I was preparing for something like this, but, you know, when living under authoritarianism, you’d better be independent of the local banks.”

Andrey admitted that withdrawing crypto in a new jurisdiction could pose a major problem as well. He said:

“Despite my overall knowledge of the industry, right now I’m in a difficult position. In Germany, very stringent requirements are applied to cash withdrawals, and I’m still researching the ways to do it.”

It is not only about personal needs. Andrey is a Russian citizen whose father was born and raised in the south of Ukraine. He doesn’t have a legal way to donate money to support the relief effort for Ukrainian civilians — such an act could be considered a criminal offense or even high treason by the government. Andrey noted:

“Like many others in Russia, I have friends in Ukraine. Some of them are in Kyiv now, sleeping in bomb shelters under artillery fire. My problems are nothing compared to theirs. To help them, I had to find someone on the ground who would agree to exchange my USDT for hryvnias [Ukraine’s currency]. After I made sure my friends’ banking cards worked, I used this opportunity. The sum wasn’t huge, but I hope it was at least some help.”

“We could not receive international transfers to Ukrainian accounts”

Anna Shakola, a native of Kyiv, began to work as an NFT project manager at Cointelegraph in November 2021, several months before the war broke out. She had not used crypto as a payment method until the crisis began: “Honestly, I had never paid by crypto, except for transacting in NFTs. I used these assets only as an investment tool.”

Shakola had to learn fast, as during the first three weeks of the war, the fiat financial system was partially frozen: “We could not receive international transfers to Ukrainian accounts and had some problems with domestic fiat transfers as well.” After becoming accustomed to performing everyday transactions using digital currencies, she learned about Unchain, a charitable project founded by Ukrainian blockchain activists.

Related: How crypto became a major source of relief for embattled Ukraine

Unchain began to channel donations to Ukrainian civilians on Feb. 27, after a network of local crypto-fiat exchanges supported the initiative. The next step was to issue virtual debit gift cards known as “Help Cards” in cooperation with Kyiv-based Unex Bank and Weld Money. The cards are designed to help families — mothers and children — who might not have the time to learn to use crypto in the middle of a war. Unchain accepts donations in crypto and converts them to hryvnias on the receiver’s end. It plans to finance up to 10,000 Help Cards.

The war has undoubtedly shattered the global economic order, and it has also become a profound stress test for the crypto industry. Despite suspicions that digital assets could undermine the international sanctions regime, they have emerged freshly branded as a resilient, flexible payments system with the potential to help millions of people on their hardest day.

It’s no accident that the Ukrainian government has championed measures that would develop its digital economy after the war. On March 16, Ukrainian President Volodymyr Zelenskyy signed a law to build a legal framework for the country to establish a regulated crypto market. Given the need to rebuild the country once the hostilities are over, the nation’s hard-earned experience with crypto will likely be instrumental in developing a thriving digital economy.