Why Russia's Ukraine invasion is crypto's moment of truth
Cryptocurrencies have become a subplot in the Ukrainian horror story, in terms of both funding humanitarian efforts and potential sanctions avoidance.
Why it matters: This is the crypto industry's moment of truth.
Between the lines: For nearly a decade, crypto evangelists have said that one of the tech's greatest benefits would be in helping users avoid macro economic disruptions. Everything from fiat currency hyperinflation to the closure of traditional financial flow routes.
- Russia's war on Ukraine, including the financial impacts on both countries, is kind of what they had in mind. And you can add in the Canadian government's recent financial crackdown on the blockading truckers.
What to watch is both utility and adoption. And it's way too early to make judgement calls on either.
Utility: Ukraine has used crypto to raise more than $50 million in relief funds that, arguably, it'd have been unable to otherwise secure. Bitcoin still doesn't make sense for buying a cup of coffee in New York, but it flows fast across international boundaries and doesn't care that the local bank is bombed out.
- Ordinary Russians also are using crypto as stored value to protect themselves against ruble hyperinflation, which was another evangelist use case. But it doesn't have too much day-to-day utility in Russia, since most must still "touch" a sanctioned financial institution in order to convert their code into cash.
- Some also think Russian oligarchs and the Kremlin are using crypto to avoid sanctions, although so far it seems to be more concern than concrete evidence.
Adoption: Crypto has primarily ascended as a speculative investment. But it's hard for even the most hardened Luddite to not at least wonder if it's prudent to sock away a little "digital gold," just in case he finds himself suddenly living in the next Ukraine or Russia.
The bottom line: Crypto is in the midst of its ripest conditions for mainstreaming, making those Super Bowl ads look like home videos. If the evangelists are proven right, then it's to the moon and so many of the past decade's investments will bear fruit. If they were mistaken, then the path forward is full of thorns.