It wasn’t Canada. It was Russia all along!
8th March 2022 |
The last time I wrote to you in Sam Volkering’s Crypto Network the worst thing happening in the world was taking place in Canada.
I said that Canada was on the verge of a bank run. If you missed that update, check it out here.
I explained what a bank run was:
A bank run is a situation where a lot of bank customers withdraw their deposits due to fears (typically) over the solvency of the bank.
This becomes a perpetual cycle, where as more people withdraw their funds, the bank needs to dive into its own capital reserves, ultimately getting to a point where withdrawal requests exceed the actual deposits held – with the result that the bank becomes insolvent.
This might seem impossible. The idea that a bank doesn’t actually have enough money to meet the withdrawal requests of all depositors is wild.
And I explained that Canada could be in a spot of bother. It was. It remains so.
But the actual bank run didn’t happen in Canada. It still might, we should add.
Instead the actual bank run happened in Russia.
The Russian Central Bank is desperately trying to get savers to keep their money in the banks. It’s pumped the interest rate to 20% from 9.5%. The Russian authorities are trying (unsuccessfully) to prevent a collapse of their entire economy as they invade Ukraine.
The people of Russia aren’t buying it.
No longer can they access the financial system connecting them to the “West”. The Russian banks have been shut out of the global interbank messaging system SWIFT, which helps banks to make payments and to settle accounts with other banks around the world.
Visa and Mastercard have also just cut Russia off from their payment networks. And it seems the Russians are now turning to the Chinese through UnionPay to even get a functional payment network operational in the country.
Meanwhile, there are numerous reports about Russians queuing at ATMs to try and get as much of their cash out of the banks as they can.
Imagine being a Russian right now watching your wealth evaporate in front of your eyes. And remember that not all Russians want this war. I’m going to guess many just want a peaceful life without war.
Instead, they’re cut off from the world, facing the real risk of economic depression, poverty, hyperinflation and civil unrest. That is not to mention increasing government restrictions, martial law and even more authoritarian rule.
Therefore, it makes sense that if you’re Russian (or Ukrainian for that matter) to be doing what you could whenever you could to protect your livelihood and any future for yourself and your family.
But if the world has cut you off, what do you do? Well thankfully for innocent people, not all the world is cut off. While they’ve come under some fire from the people in power, major crypto exchanges like Binance and Kraken haven’t blocked Russian users from their exchanges.
Kraken founder Jesse Powell put it best in a series of tweets last week:
FWIW, I would guess that the vast majority of crypto holders on @krakenfx are anti-war. #Bitcoin is the embodiment of libertarian values, which strongly favour individualism and human rights. In Canada, crypto was the only financial rail left for those who opposed the regime.
Our mission at @krakenfx is to bridge individual humans out of the legacy financial system and bring them in to the world of crypto, where arbitrary lines on maps no longer matter, where they don’t have to worry about being caught in broad, indiscriminate wealth confiscation.
Sometimes the hardest thing about having power is knowing when not to use it. Our mission is better served by focusing on individual needs above those of any government or political faction. The People’s Money is an exit strategy for humans, a weapon for peace, not for war.
Besides, if we were going to voluntarily freeze financial accounts of residents of countries unjustly attacking and provoking violence around the world, step 1 would be to freeze all US accounts. As a practical matter, that’s not really a viable business option for us.
Powell is on the money (if you’ll excuse the pun). The core idea of what crypto represents is an alternative financial system of inclusivity that is sharply differentiated from the controls and restrictions of centralised authority.
It allows an escape to a world that offers all the best bits of the traditional system and strips out many of the worst.
“But Sam, Russia is using crypto to evade economic sanctions, it’s a criminal’s playground!”
I hear this a lot. And we’ve discussed the criminal aspect of crypto before. Regarding the evasion of sanctions, let me ask you this…
If you were trying to evade a sanction, would you use a network that has 100% transparency of every single transaction that’s ever taken place? Would you use the most accurate record-keeping network ever known to man to move money around the world?
Of course not. Bitcoin’s network is quasi-anonymous. That means that there’s no personal information linking you to your wallet… until someone figures out whose wallet belongs to whom.
If for some reason someone was able to link you to a specific wallet, they’d be able to track down every single transaction you’d ever made from that wallet, and from connected wallets.
And some of the forensic blockchain analysis that’s now possible would mean that for Russia to use something like bitcoin to evade sanctions would actually be the worst way you could conceive to do so.
That’s why when this garbage excuse is thrown up as to why crypto needs more regulation, it shows just how little regulators and people in power actually understand.
But make no mistake, crypto is by far and away in the midst of a great advertising campaign. What Canada and now Russia has helped to demonstrate is this: when you understand the power of an alternative financial system, and you know how to use that system to its fullest advantage there are easy ways to grow your wealth without the risks that many people think might exist.
What I’m saying is that the way in which the crypto ecosystem, the “cryptoconomy”, has evolved over the last decade is nothing short of breathtaking. It’s now being put to the test as a true alternative financial system for anyone, anywhere, anytime.
Its promise as an alternative from centralised controls and authority is under review right now. And I think it’s doing a tremendous job.
Of course, it’s not just the governments of Russia and Canada that gives pause for why people should be using this alternative system.
The cost of living is rising. Your bills are skyrocketing. Everything is more expensive this week than it was last week. Inflation continues to rise: growth is beginning to slow. We are on the verge of seeing a return of stagflation.
Commodity prices are skyrocketing and some suggest this puts major global economies at risk of recessions. Perhaps. What is clear is that it’s harder and harder to earn and have the value of your wealth protected and to beat down these pressures.
However, there is an escape…
When we say alternative system, we really mean it. The problem is that most people don’t really know how to use it properly. Fortunately I do, and over the coming weeks I’m going to explain exactly some of the best, smartest ways to use it so that your wealth isn’t decimated – a challenge that many innocent people in Russia are currently facing.
Stay tuned over the coming weeks for more on that…
Crypto to Know
Below is our “Crypto to Know” list where you’ll find several cryptos that we think you should be taking the time to learn and understand.
They each form an important part of the burgeoning crypto ecosystem.
Several of these cryptos are doing very different things to others.
What’s key is to learn that every crypto has its own use cases, its own guiding principles and its own particular potential.
Each crypto is to be judged and assessed on its own merits.
Our aim here is to help you understand these cryptos and the wider crypto world.
These aren’t specific recommendations but a guide to help you learn and build your confidence in operating in this space.
We will add more names to this list over time. However, if you’re new to the world of crypto, these are the names where we think you should start your education and learning.
We’ve also added links to each one.
The links are to what we believe, in each case, is the best resource for learning about that crypto.
“Crypto to Know” watchlist
- Bitcoin –it/wiki/Main_Page
- Ethereum – ethereum.org/en/what-is-ethereum
- IOTA – docs.iota.org
- Tezos – https://tezos.com/learn/getting-started/
- Filecoin – docs.filecoin.io
- Cosmos – v1.cosmos.network/intro
- Binance – binance.com/en/about & research.binance.com/en/projects/bnb
- FTX – ftx.com & help.ftx.com/hc/en-us
- Solana – https://docs.solana.com/introduction
- Secret Network – https://scrt.network/about/about-secret-network
Sam Volkering
Editor, Sam Volkering’s Crypto Network
