kyiv: I fell in love with bitcoin for ideological reasons. Free from predatory banks with their massive transaction fees and pesky government interference, cryptocurrency promised to reinvent the concept of money in the digital age. It didn’t hurt that their price, and that of other electronic currencies, increased exponentially since I started following and trading them two years ago. it was proof that me and my fellow libertarians were on the right side of history.
a true believer, i panicked to learn that russian president vladimir putin has gotten into the crypto ring. The move seemed to indicate that the early, idealistic days of bitcoin might be coming to an end. Putin, once hostile to digital currencies, changed his tune after meeting Vitalik Buterin, the influential Russian-born billionaire founder of Ethereum, a software platform that uses blockchain technology similar to that used to power bitcoin. /p>
“The digital economy is not a separate industry, it is essentially a foundation for creating new business models,” Putin said after a meeting on the sidelines of the St. petersburg economic forum last summer, where buterin agreed to help russia join the growing blockchain economy.
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Shortly thereafter, the Kremlin began touting its investment in digital currencies as a way for Russia to grow beyond oil and gas. Russia now plans to legalize cryptocurrency trading and create a legal framework for initial digital coin offerings (ICOs), the unregulated means by which a crypto startup can raise funds.
Russia has an underground criminal hacking asset dealing with credit card theft, ransomware, and other digital evils.
Russian banks have also said they will offer citizens the option to purchase digital currencies and store them in personalized digital wallets. this is a major change for a nation that threatened to ban cryptocurrency trading and arrest crypto users just over a year ago.
A trusted Putin ally recently launched Russia Miner Company, an ambitious cryptocurrency mining operation that plans to fund itself through a $100 million ICO. Meanwhile, the Kremlin created the Russian Association of Blockchain and Cryptocurrencies (RABIK) to study and promote their use in Russia. and there are even plans to use ethereum’s unique blockchain, which enables smart contracts, in which terms are set automatically by a computer, in the Russian banking sector, and for tracking property titles.
putin’s sponsorship of digital currencies may be good news for russia, but it goes against bitcoin’s founding principles and ideology. Cryptocurrency emerged during the height of the 2009 global financial crisis and was seen as a counterweight against big government control of the monetary system. The Kremlin’s abrupt entry into digital currencies is not only unprecedented; threatens a fragile ecosystem.
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let’s not forget that russia represents the dark side of the digital world: they are purveyors of “fake news”. they are accused of meddling in the us uu. from last year. presidential election and orchestrating propaganda campaigns across Europe, not to mention the hacking of the Ukrainian power grid.
The country also has an underground criminal hacking asset dealing with credit card theft, ransomware, and other digital evils. it is not unlikely that putin will use many of the same tricks on the bitcoin or ethereum networks once russia controls a significant part of their computing power.
The bitcoin network has a fundamental weakness at its heart: it is powered by a decentralized network of miners, who collectively verify each set of transactions. If a hostile power or entity were to take control of more than 51 percent of the network, it could rewrite the blockchain to reverse your transactions, thereby spending twice as many bitcoins and essentially printing digital money for free.
this would require enormous computing power. but russia has the resources to hack the bitcoin network for its own personal gain. in fact, with its 20 gigawatts of excess power capacity and consumer electricity prices as low as $0.01 per kilowatt hour, the country is uniquely positioned to dominate cryptocurrency mining.
It’s not hard to see a cynical dictator like Putin, who doesn’t share the utopian vision of bitcoin’s founders, authorizing an attack on the cryptocurrency’s blockchain.
The time is also right. Putin’s interest comes at a time when China has decided to ban bitcoin trading. Chinese miners once controlled nearly 30 percent of the bitcoin network, but that’s about to go down: the open space that Russia could try to fill.
Shady characters behind Russia’s crypto push offer further cause for concern. Russian Duma lawmaker Andrei Lugovoi, the main suspect behind the poisoning of former Russian spy Alexander Litvinenko in London, has reinvented himself as a blockchain enthusiast, arguing that digital currencies would allow Russian companies to circumvent Western sanctions.
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“This is a rare situation where Western sanctions policy gives rise to an opportunity for our own businesses to create something new,” Lugovoi said at a recent cryptocurrency forum in Moscow, according to interfax russia.
lugovoi’s argument strikes at the heart of the kremlin’s newfound enthusiasm for digital currencies. Putin and his henchmen, many of whom face sanctions for their support of Crimea’s annexation, see decentralized digital currencies as a way to circumvent US hegemony over the global financial system. cryptocurrencies like bitcoin are anonymous and can be traded globally without raising alarm bells, making them ideal vehicles for money laundering; they are much more discreet than Panamanian banks.
Although the market cap of cryptocurrencies remains below $100 billion, their growing popularity threatens the dominance of the mighty US. uu. dollar. and anything that threatens to undermine the us. The dollar or the US financial system will surely warm the cockles in Putin’s heart.
Putin becoming one of bitcoin’s staunchest advocates flies in the face of the libertarian, anti-government ideology that fueled the digital currency’s birth in the first place.
putin criticized the us. dollar most recently at the September summit of the Bric countries (Brazil, Russia, India and China), offering to work together with their partners to “overcome the excessive dominance of reserve currencies”. he even proposed to create a special cryptocurrency, briccoin, to help facilitate trade between countries.
that putin has become one of the staunchest defenders of bitcoin goes against the libertarian and anti-government ideology that fueled the birth of the digital currency in the first place. the fox has become the most enthusiastic chicken coop builder.
I sold my bitcoins recently. And as long as Putin is optimistic about them, I don’t plan to buy any more.
vijai maheshwari is a writer and entrepreneur living in kyiv. He spent six years in Moscow in the 1990s and was also the editor-in-chief of Russian Playboy.
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