“War Proof” Bitcoin Still Faces Immense Competition From Gold ⋆ ZyCrypto
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- Bitcoin’s nature makes it impervious to the effects of conflicts.
- Since the start of the Russian-Ukrainian conflict, Bitcoin donations have flowed.
- Despite the increasing use of cryptocurrency, gold is proving itself yet again as the ultimate wartime asset.
Putin’s decision to invade Ukraine sent shockwaves around the world. Investors eye Bitcoin to hedge their wealth in the face of conflict but despite its glowing qualities, it might play second fiddle to gold.
Bitcoin: War Proof?
Bitcoin was designed to flip the nature of transactions on its head and as an added benefit, it earned the moniker of being a store of value. The hard cap of 21 million Bitcoins was a revolutionary innovation, drawing a strong following as it embodied the ethos of decentralization. It was beyond the control of Central Banks and was seemingly impervious to macroeconomic factors.
The combination of these qualities made Bitcoin the ultimate war-proof asset for investors. During the heat of the pandemic, retail and institutional investors flocked to Bitcoin as the cryptocurrency surged in value, reaching new peaks. In November 2021, Bitcoin reached its all-time high of $68,789 while the rest of the markets struggled with the crippling effects of inflation that was akin to figures from 1982.
As Russia’s invasion of Ukraine gets underway and Tradfi becomes limited by the constraints of war, funds are being transacted in BTC with ease. Come Back Alive, a Ukrainian NGO with the aim of supporting the army has successfully raised $400,000 in digital assets while the Ukrainian Cyber Alliance has raised over $100,000 in BTC.
The US and other countries are mulling over imposing hard sanctions on Russia but experts believe that the use of cryptocurrencies will mitigate the harshness of the sanctions. European countries are pushing for the exclusion of Russia from the SWIFT system, the world’s main international payments network for smooth cross-border transactions. A switch to cryptocurrencies by the Russians in response to the sanctions would provide the first instance of an aggressor-nation using Bitcoin and cryptocurrencies in conflict.
 
 
Bitcoin Falters
At the dawn of the invasion, Bitcoin dropped below its one-month low to $34,000 to the dismay of investors. Bitcoin’s fall mirrored the decline of other assets, leading pundits to comment on the similarities between Bitcoin and the stock markets.
Amid the chaos, gold appeared to be the silent winner as the age-long store of value surged to a 15-month peak of above $1,900 with indicators pointing that it could soar beyond $2,000. Bitcoin critics are latching onto this metric saying that “Bitcoin is not digital gold, but digital fool’s gold.”
Perhaps, Bitcoin’s dip in form is only a small blip and the largest cryptocurrency would find its footing in the chaos to shine as the “war-proof asset” as its maximalists claim.
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