The Bitcoin Layer

The Bitcoin Layer

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The Bitcoin Layer
The Bitcoin Layer
Bitcoin was built for a multipolar world

Bitcoin was built for a multipolar world

Bitcoin's role in the Russia/Ukraine war. A multipolar world. Bitcoin's current bull market.

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Nik Bhatia
Mar 02, 2022
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The Bitcoin Layer
The Bitcoin Layer
Bitcoin was built for a multipolar world
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If 2021 was bitcoin’s arrival on the main stage, 2022 is quickly becoming its first major feature. Unfortunately, we have war to thank for that.

War in Ukraine

A core component of my investment thesis on bitcoin is its geopolitical force. With a gravitational pull, bitcoin’s network attracts people and policy makers from all walks of life. The current conflict in Eastern Europe is no different. Before you listen to cries of how bitcoin is helping Putin dodge sanctions and asset freezes, take a moment to observe how bitcoin is color blind and more importantly, politics blind.


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Bitcoin enthusiasts thought El Salvador’s legalization of bitcoin brought mainstream legitimacy to bitcoin—how about the government of Ukraine’s official Twitter account asking for donations in cryptocurrency to support its war effort? We’ve crossed over into an era of general understanding that bitcoin is a freedom tool, and it doesn’t discriminate based on any of the traditional metrics: age, nationality, religion, politics, or physical location. Here is the historic tweet:

Twitter avatar for @Ukraine
Ukraine / Україна @Ukraine
Stand with the people of Ukraine. Now accepting cryptocurrency donations. Bitcoin, Ethereum and USDT. BTC - 357a3So9CbsNfBBgFYACGvxxS6tMaDoa1P ETH and USDT (ERC-20) - 0x165CD37b4C644C2921454429E7F9358d18A45e14
3:29 PM ∙ Feb 26, 2022
203,737Likes55,284Retweets

Let’s note the two other forms of payment being solicited by Ukraine: Ethereum and USDT, otherwise known as Tether. Bitcoin is sharing this stage with the market’s second largest cryptocurrency, as well as the market’s largest stablecoin (I wrote about Tether recently and its role in the gradual bitcoinization of balance sheets around the world). While my opinion is that neither Ethereum nor Tether can ultimately satisfy the demand for a truly neutral currency, we must acknowledge that bitcoin shared this historic moment with associated technologies.

Ukraine, crypto, donations
PYMNTS.com

In Russia, bitcoin is taking on a slightly different role—we can see a material spike in bitcoin/ruble volume. WSJ reports:

On Binance, there has been a surge in trading volume of bitcoin in exchange for rubles since just before Russia’s invasion began. Between Feb. 20 and 28, about 1,792 bitcoins exchanged hands in the ruble/bitcoin trading pair, compared with only 522 in the nine days before that, according to data on Binance.

Russian citizens that have used bitcoin as a long-term currency alternative to the ruble are finding solace in their decision this week as BTC/RUB hit an all-time high today:

Image
h/t Holger Zschaepitz for the chart

While Ukrainians are using bitcoin to emigrate or raise war funds and Russians are using bitcoin to protect themselves from currency collapse, we will not see the Russian government significantly using crypto to avoid sanctions yet, according to the US Treasury department:

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