XREAL Supports Ukraine
This Weeks’ Deep Dive
Fiat Currency v. Cryptocurrency
Russia invaded Ukraine on February 24 2022 which disrupted not only diplomatic relations worldwide but also the global economy.
The Russian Ruble tanked 30% in value since the start of the war and the Ukraine currency has also decreased 10% since last month. Even though fiat currency has been touted as a stable and secure asset, this is clearly not the case in the event of an international crisis.
On the other hand, the Ethereum’s price has increased almost 20% since the beginning of the invasion which is indicative of many investors relying more on cryptocurrencies over fiat currency during a major crisis.
Cryptocurrencies have also been a critical route to obtain external monetary support for Ukraine.
Cryptocurrency Used in Action
On February 27th, Ukraine’s official Twitter account sought donations through Bitcoin, Ethereum, and USDT and shared its wallet address to the public.
And as a result, Ukraine was able to raise 20 million dollars in 3 days through cryptocurrency donations.
Without using cryptocurrencies it would have been much more challenging for most people to transfer their funds to monetarily support Ukraine. With cryptocurrencies, all it takes is to transfer funds to Ukraine’s crypto wallet which takes almost no time and is also direct and transparent. Where as the traditional route would have required a third party which mediated the private donations and would most likely have taken much longer.
Digital Assets’ Resilience
While digital assets are insusceptible to crises in the physical world, most physical assets are not secure in the event of a major crisis like war.
[Ukraine’s Kharkiv after Russian bombing]
Many physical assets had to be abandoned by Ukrainians in order to flee to another location. A lot of physical assets have also been destroyed due to Russian shelling in major cities.
As banks and conventional financial institutions do not work in the event of a crisis, decentralized digital assets could be the only assets one is left with.
Digital Assets Going Forward
Besides Ukraine and Russia which are directly involved in a one-of-a-kind crisis, there are countries such as Iran, Venezuela, and El Salvador which have all faced challenging monetary crises, with sharp increases in inflation and the cost of living. These nations are starting to turning to cryptocurrencies as a means of exchange and store of value.
Overall, the total market cap of cryptocurrencies have steadily increased over time.
As more people spend time in the virtual world for convenience, or safety from pandemics or war, digital assets will play a more crucial role going forward.