Bitcoin Russian Black Bag – Bitcoin Magazine
This article originally appeared in Bitcoin Magazine “Censorship Resistant Problem.” To get a copy, visit our store.
If the world around you collapsed overnight, it’s easy to imagine that you would have a plan. Many would pack their bags and board the next plane to start a new life in a better place. But when society collapses slowly, it’s harder to know when it’s time to go. Sure, the shelves are bare now, but that’s just because of the panic purchase. The government may have passed laws banning criticism, but they will not last, right? And besides, what would you do with your job, with your cat?
For several weeks these were the questions the Russians asked themselves when it was suddenly too late. At first glance, not much changed after Vladimir Putin ordered the attack on Ukraine. Across the border, rockets rained down, killing countless civilians and forcing millions to flee their homes, but in Moscow things went more or less as normal. People worked, traded and partyed just like before. But gradually, and then suddenly, the war began to shake the lives of the Russians as well.
In the months before the invasion, people believed what they were told by the government – that Western spy agencies’ reports of troops gathering on the divided border were simply hysteria, and that there was no plan to launch an offensive.
“Throughout history, Russia has never attacked anyone,” Kremlin spokesman Dmitry Peskov insisted, just two weeks before the tanks began rolling. “After going through so many ourselves, we are the last country that would resort to war.”
Few, it seems, were as surprised as ordinary Russians when Putin appeared on their television screens in the middle of the night to announce that he had ordered “a special military operation” to “demilitarize and de-Nazify” Ukraine.
“We were like little children,” Masha Kopilova, a 28-year-old marketing manager from the Siberian city of Tyumen, told Bitcoin Magazine, “we did not think anything bad would ever happen – and so it did.”
She was on a business trip to Turkey at the time, worried about economic chaos and political repression; she is one of the tens of thousands of russians who are now determined not to return home.
In the days and weeks since, the West has pressed the economic equivalent of the nuclear button, imposing sanctions on a scale never seen before against an economy that until recently was the sixth largest in the world in real terms. Measures introduced by countries such as the United States and the United Kingdom, as well as the EU, have blocked investment by international companies and cut off access to foreign funds, threatening to force Russia to default on its debts. The extent and severity of the restrictions overshadow everything that was imposed on countries such as Iran, Cuba or North Korea in the past. Although no one knows what specifically they want to achieve, it is clear that they are designed to harm.
“This is an economic blitzkrieg against us,” President Vladimir declared in March, as a new round of Western sanctions began to bite. “But it has failed.”
For years, the Kremlin has worked to reduce its dependence on foreign exchange and technology, fearing that the day might come when they were shut down. In reality, Russia was as wired into the global financial system as almost anywhere else. The disconnection from the SWIFT payment platform has dried up billions of the value of the banks, while export bans have seen that the production of everything from cleaning products to tanks has stopped.
Few thought their personal relationship would change that much. “We have had sanctions before,” said Andrei, an agricultural pesticide seller from the town of Samara on the Volga River, just 36 hours after the invasion began. “We had them because of Crimea, we have had them because Donald Trump won that election – they will try to punish us for anything. But it has never affected me.” And in many ways it had not done so – he drives a new Mercedes and his Instagram is full of photos taken on holiday abroad from China to London, but this time things were different.
People like Dmitri had not even noticed that the ruble had lost half its value after a brutal trading day before the prices of basic goods began to skyrocket due to rising costs for manufacturers. The price of a new iPhone had almost doubled towards the end of the first week, with speculators rushing to convert their money into something of value and Apple fans feared that the company would withdraw. Just a few days later, the Silicon Valley company announced that it would stop sending devices to Russia and close its online stores. “We only have one laptop left,” said a shop assistant at a retailer in Moscow’s sparkling Tverskaya Street the first weekend after the war began. “We have been completely wiped out.”
Social networks such as Instagram, TikTok, Facebook and Twitter have been banned, cementing the country’s rapid descent into an isolated pariah state. New laws prohibit “discrediting the Russian military” and threaten journalists with up to 15 years in prison for spreading “false news” if officials continue to insist is just a “special military operation”. In reality, this means no printing of facts that do not come directly from the Kremlin, forcing independent media to shut down instead of itself becoming a propaganda outlet. Instead, a network of Telegram channels and online newsgroups has become the only source of Russian-language news that challenges Putin’s narrative.
At the same time, young people were appalled by the news that some of their favorite brands, including H&M, Uniqlo and IKEA, would leave the country, as well as fast food companies such as KFC, Burger King and McDonalds. Some intrepid Happy Meal lovers stood in line for hours the last day Golden Arches was open to fill their refrigerators with Big Macs and cheese sauce – a special menu item available only in Russia. “It is not fair that ordinary Russians are punished,” said Vyacheslav, a student who works part-time in a shop. “People have families, they have to pay taxes.”
Not everyone has been equally disappointed that the country is cut off from the rest of the world. “The news is getting better and better every day,” the brutal Chechen warlord Ramzan Kadyrov wrote online. Gone is the dominance of the market of American body-destroying spirits and ready-made food from McDonald’s, for people who want to make themselves overweight. I have always asked people to buy our organic food and eat right. ” In addition to providing dietary advice, Kadyrov was put in charge of the failed attack on Kyiv and has previously been accused of abducting political opponents and murdering LGBTQ + people in the region he controls.
The governor of Russia’s central bank, Elvira Nabiullina, agrees. “Now it is perhaps more important than ever that people do not waste money on unnecessary products,” she warned in April in a strong assessment of the “difficult period” residents are facing. “Sanctions have primarily affected the financial markets, but now they are beginning to affect the economy,” she said, warning of rising inflation and uncontrolled inflation.
But it is not just luxury imports that the Russians are missing out on. Fearing to return to the lack of Soviet style, retirees have raided grocery stores across the country, removing the aisles for canned food and long-lasting foods. “The shelves were empty – no salt, no sugar, no pasta, no buckwheat, and only expensive rice,” said Anna, a shopper at the Perekrestok supermarket in the Russian capital, after posting a clip of elderly people breaking the last couple of years. objects again. “Now my cat eats more expensive food than me,” said Darina, a 25-year-old interpreter, who lamented the prices of animal supplies.
Like Kopilova, who has decided to stay in Turkey, many Russians are desperate to travel and live abroad instead. But with most of Europe closing the airspace for flights from the country, people have few choices to escape, with tickets to the few destinations still open – Turkey, Georgia and Armenia – actually tripling in price. “I bought a Rolex about a year ago,” Sasha, an IT specialist working for a British company in St. Petersburg, told Bitcoin Magazine from a coffee shop in Istanbul. “I sold it to pay for tickets for me and my boyfriend to get here, so we wanted some money to set up.” Others are not so lucky, and it is believed that tens of thousands of potential emigrants have returned home because they did not have access to their money with Russian bank cards blocked abroad.
In an effort to prevent people from taking their savings out of the country, Putin has introduced a ban on buying foreign currency and made it illegal to travel with more than $ 10,000 in cash. As a way around this problem, many were forced to buy jewelry or electronics to sell when they arrived at the destination.
“I waited an hour to buy dollars,” sighed Kyle, a US citizen working in the Russian capital, after queuing at a currency exchange with desperate locals, “but the woman in front of me got the last ones.” He has since left the country; “Finally, I put all my rubles in crypto to get my money out,” he says in the form of an online update.
Anastasia, a young Moscow-based investor who advises companies on cryptocurrency trading under the pseudonym @LadyAnarki, says that interest in digital exchanges has skyrocketed in recent weeks. “Russians understand the black market and the gray market – everyone here understands how they can circumvent rules they don’t like. It’s pretty anarchic that way. They follow the rules they really have to, and avoid the others. They don’t sell dollars, so where do people look? To Bitcoin. “
“Russians generally take everything in stride, that’s how we are culturally because of how much we’ve been through as a country,” she adds. “Some people understand what is happening, and it is they who will leave, but most will stay and hunker down and will take the negative consequences and poverty that come. The older generation living in retirement who do not understand crypto will take the heaviest blow. “
In January, the country’s central bank said it was considering a “total ban” on cryptocurrencies – making purchases, sales, inventory and mining punishable by high fines. According to officials, the technology uses too much energy and is a high-risk investment for citizens. However, since the start of Putin’s war in Ukraine, it is clear that many view Bitcoin as a safer bet than the ruble.
There has been speculation that Moscow and Russian state-owned enterprises could use crypto as a way around restrictions imposed by the West. US Senator Elizabeth Warren claimed that “cryptocurrencies risk undermining sanctions against Russia so that Putin and his cronies can avoid economic pain.”
Top industry figures, however, have resisted calls for a ban on Russian buying and selling, with Changpeng Zhao, the founder of Binance, saying that although it is in accordance with the law, we distinguish between Russian politicians who start wars and normal people, many normal Russians do not agree on war. We are not political, we are against war, but we are here to help the people. ” Despite this, it is increasingly difficult to find a switchboard that is capable of processing Russian plastic.
Those who have traveled and are able to wait out the crisis abroad seem overwhelmingly to be well-paid IT specialists who work remotely and were the first to invest in Bitcoin. One, Taras, who is half-Ukrainian but grew up outside Moscow, has moved to the coastal city of Antalya in Turkey. “At first I wanted to protest,” he said, “but I realized I would be arrested, I would lose everything I have, and I would still be in Russia. I never thought this would happen, but I at least had a plan to get out when it happened. ” Those who did not think ahead are now in a poorer, gloomier and more oppressive country every day.
