Hey, everyone. Among the first signs of spring: a climate-change-induced increase in pollen and a rising new Covid variant. Can we have six more weeks of winter?
The Plain View
Sergey Vasylchuk knew trouble was afoot when Russian troops began gathering at the border. People assured him the massed armies were only a feint, but the CEO of Everstake, a Ukraine-based blockchain company, didn’t believe it. “I’m paranoid; I’m an engineer,” he says. He begged his employees to leave the country—Call it a vacation if you like, he told them, promising to pay for a retreat to a foreign sunny climate. Not everyone took the offer. Vasylchuk himself already had plans to travel to Florida to attend flight school, a passion of his. When the invasion came–two days after he arrived in the US–he worked from his stateside outpost to make sure his parents, who are still in Ukraine, were safe, and he did what he could for his employees. Some are now fighting the Russians. “My home is probably destroyed,” he says. He’s in South Florida indefinitely—not partying with fellow blockchain bros, but working “24/7,” he says, to help his country. With crypto.
“I can do only two things in my life—crypto and aviation,” he says. He chose the former, determining that the best way to serve his country was to supply it with funds via digital currencies. Not long after the invasion, he set up a DAO. That’s a decentralized autonomous organization, an entity whose trustworthiness can be verified by the reliable blockchain ledger. Vasylchuk partnered with the Ministry of Digital Transformation of Ukraine and a currency exchange called FTX to set up a system for the government to accept crypto currency directly from donors. So far the fund has taken in more than $65 million, which has been distributed between the country’s defense efforts and humanitarian aid. The effort is one of several using blockchain-based technologies to help Ukraine and its people during these nightmare weeks. Some have even dubbed this conflict the Crypto War.
It’s unlikely that those who have lost homes or loved ones would agree that crypto is the headline here. But the chaos of war often gives rise to alternative economies; in this case it’s not so much a black market (such as the one that helped rebuild the Japanese economy post–World War II), but one that rests on the unique virtues of crypto. Apparently Ukrainian president Volodymyr Zelensky recognizes this, as just this month he signed legislation that blessed key activities in the crypto sector, like currency exchanges and bank integration for crypto companies.
While the spoils of crypto are often enjoyed by privileged investors eyeing Lambos, the technology seems almost custom-made to surmount the challenges of a beleaguered Ukraine. “A bitcoin transaction takes 10, 20, 30 minutes versus a wire transfer that might take two or three days, and you can’t be sure of that—by then [the Russians] might have bombed a national bank,” says Illia Polosukhin, a cofounder of the blockchain company Near. Polosukhin is also one of the instigators of a DAO called Unchain, which has so far taken in $7 million for aid. In addition, these crypto funds accept donations anonymously, which is particularly advantageous for any potential givers with ties to Russia, whose leader is known to hold grudges. Finally, the idea of using crypto in this way is just plain attractive to those sitting on huge piles of bitcoin, ether, or other coins with insanely high values.
But maybe the most significant aspect of wartime crypto in Ukraine is how private currencies are nudging their way into everyday commerce. Because the banking system is shaky in Ukraine, some suppliers receiving coins aren’t interested in making the exchange from cryptocurrency into fiat. “It’s not clear what the exchange rate will be between US dollars and hryvnia [the national currency], and so having coins in crypto is beneficial,” says Polosukhin. Crypto might be particularly precious for those fleeing the country, who don’t want to travel with cash, or simply can’t get it from their bank accounts. For people remaining in the country, Polusukhn says, Unchain is working on the equivalent of a crypto ATM card, where people can buy supplies using their digital wallets.
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Both Vasylchuk and Polosukhin, who is currently running his company from Lisbon, think that crypto will be essential in restoring their battered homeland. “We need to stop the war and rebuild this country,” says Polusukhn. “The crypto world will play a huge part in that—there are no banks in some places anymore!”
The cryptocurrency movement to date has been plagued by the blatant greed of many of its adherents, with looney fluctuations in value discouraging its acceptance as a legitimate alternative to traditional economic tools. Even Ethereum inventor Vitalik Buterin is troubled by this. “The peril is you have these $3 million monkeys, and it becomes a different kind of gambling,” he told Time magazine. But behind the devastation of the Russian invasion, there’s evidence of how blockchain-based alternatives might justify some of the exhausting hype.
Some investors are already celebrating this: In a recent letter to shareholders, Larry Fink, the CEO of the BlackRock hedge fund, touted the war’s “potential impact on accelerating digital currencies.” Vasylchuk sees the crisis not as a turning point but an acceleration of the inevitable. “Crypto was not underground before,” he says. “We just lost the restrictions.” Before we celebrate the future, though, let’s hope for peace in Ukraine—a respite that, all too sadly, bitcoin can’t buy.
Time Travel
I’ve quoted from my 1994 WIRED article about digital currency in the past, but I can’t resist a reprise. Twenty-eight years later, we’re finally working out the issues I wrote about then.
Is e-money really going to happen? Inevitably. Hard currency has been a useful item for a few millennia or so, but now it has simply worn out its welcome. A recent paper by several cryptographers at the Department of Energy's Sandia National Labs in Albuquerque, New Mexico, begins by enumerating what all e-money advocates identify as the fatal flaws of cold hard cash: “The advent of high-quality color copiers threatens the security of paper money. The demands of guarding it make paper money expensive. The hassles of handling it (such as vending machines) make paper money undesirable. The use of credit cards and ATM cards is becoming increasingly popular, but those systems lack adequate privacy or security against fraud, resulting in a demand for efficient electronic-money systems to prevent fraud and also to protect user privacy …”
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The coming of e-money would seem to demand that the governments of the world get together and implement a scheme to make the shift in an orderly fashion. But that's not happening. The US, in particular, is promulgating public cluelessness. When I called a spokesperson for the Federal Reserve to ask about electronic cash, he laughed at me. It was as if I were inquiring about exchange rates with UFOs. I insisted he look into it, and he finally called me several days later with the official word: The Federal Reserve is doing nothing in that area.
Ask Me One Thing
James asks, “Given the disinformation and malware hacking coming from Russia during its invasion of Ukraine, would it be feasible to just cut Russia off from the internet completely?”
Thanks for the question, James. There’s a very real threat of Russian cyberattacks, as evidenced by this week’s warning from the White House to batten the digital hatches, which isn’t a bad idea regardless. But cutting off the .ru domain—as some, including Ukraine itself, are arguing—isn’t the answer. First of all, politicians or even the UN can’t do that. But even if they could, it’s possible that sophisticated state-sponsored hackers would be able to launch their attacks anyway, just from other places.
I suspect that the real question you ask is whether the world should isolate Russia by blocking traffic to and from that country. Vladimir Putin himself has answered that question—by ordering a high degree of isolation. As The New York Times reports, he has constructed “a digital barricade between Russia and the world” in an attempt to prevent the Russian people from learning the truth about the invasion of Ukraine and sharing that information among themselves on major platforms. So cutting off Russia from the internet would actually be playing into Putin’s hands. It may well be necessary to ban business interactions with a rogue nation and sanction those who violate the ban. But we should let authentic information flow.
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You can submit questions to mail@WIRED.com. Write ASK LEVY in the subject line.
End Times Chronicle
Crazy heat waves in Antarctica and the Arctic, with temperatures as much as 70 degrees above normal. Penguins, take off those tuxedos!
Last but Not Least
Speaking of the Russian internet, its biggest tech company is falling apart.
Also, tech workers are fleeing Russia.
As bad as things are, we haven’t seen a worse cyclone than the one that hit Pakistan in 1970 and almost started a war. Yet.
The dark side of payday loans. Not that there’s a bright side.
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Updated 3/25/2022 7:00 pm ET: A previous version of this story incorrectly referred to the Ukraine Ministry of Information. It is the Ministry of Digital Transformation of Ukraine.
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