May 25, 2022
Some will say that Russia’s invasion of Ukraine is about redrawing the conclusion of the Civil War, reuniting “historical lands” to catalyze a return to form for the Russian Empire, securing land to secure movement of energy commodities, and destabilizing the West. However, perhaps above all things – Russia’s invasion neatly fits into a broader conflict involving a struggle for compute power.
That’s because he who controls the chips, controls the world. 90% of semiconductor-grade neon is sourced from Ukraine. However, the key element here is that some of the precious metals that are sourced for the chips in your phones are sourced from Russia. The advanced computational power required to stay at the forefront of transformational industries in tech – such as AI, machine learning, high-power computing, and the like – will likely also decide who leads the world in innovation.
We can think of today’s semiconductor shortage as early alarmism about who will have access to this precious commodity – and consequently, who will write the rules of the new global tech hegemony.
Even before Russia’s invasion of Ukraine, Western economics have offered concern about China’s increased presence in the South China Sea. In fact, political-types posited that the next geopolitical crisis would stem from this hotly-contested and controversial region of the globe, rather than from Eastern Europe. That’s partly because China lays claim to Taiwan, a disputed country which has become critical to the semiconductor industry.
It’s no secret that China has been exercising greater influence over Hong-Kong and has alluded to exercising its territorial claim over Taiwan, which it says is a territory of the Chinese Mainland. However, given the country’s gauge on the Russian invasion, the temperature for Chinese action is, likely, low.
Though these two independent conflicts are happening halfway across the world from each other, they offer some insight into a game of 4D chess that politicians and investors are gaming – one which is convoluted, multi-dimensional, and has trillions at stake.
Where Crypto Fits Into The Drama
As it always seems to be, crypto has found itself adjacent to the ongoing geopolitical crisis (go figure). Of course, this time through, crypto is arguably helping Ukraine. That’s happening in two primary ways: in the form of Ukranians stashing away their money in crypto and in raising money for charity efforts.
The first case, and perhaps the most immediate “human” case, involves billions of dollars – which are making their way across the “digital divide” in swaps on exchanges. This has mainly been motivated by Ukraine’s central bank suspending electronic cash transfers. In response, U.S. Dollar-denominated stablecoins such as the USDT have fetched premiums on Ukrainian crypto exchanges.
As for the latter case, Ukraine is embracing the crypto community’s love of the country and its embrace of crypto and meme culture. The country opened up crypto wallets for donations in BTC, ETH, and other ERC-20 tokens such as stablecoins. In less than 12 hours, they raised more than $5 million.
All-in-all, Ukraine’s embrace of crypto has been responded with the crypto community’s unsurprising embrace of Ukraine. In some ways, Ukraine has leveraged crypto to turn this into a personal event… dare we call it A People’s War.