Revolutionaries in Ukraine Find “Stateless Currency” in Crypto

In Ukraine, years of political  unrest have created a welcoming habitat for cryptocurrency miners and  startups, as the collapse of the state currency, the hryvnia, has  sparked a massive demand for alternatives. Hundreds of vendors in the  country now accept dozens of different cryptocurrencies, making it one  of the easiest places in the world to spend crypto. 

Rent and power are both cheap in  the region, due to the struggling economy, and there is an abundance of  skilled workers and engineers seeking employment. In a place where the average  monthly salary is $300, the crypto industry is giving thousands of  people opportunities to rebuild their lives. 

Last week, Bloomberg reported that over 100,000 Ukrainian engineers contract remotely for Silicon Valley companies. Michael Chobanian, “father” of  Kyiv’s crypto community, explained that people are more open to  experimenting with alternatives in these desperate times. Chobanian  said: 

“We are in the top five in terms of corruption. We have a war going  on. The economy is shattered. So basically what I’m trying to say is  that we have absolutely nothing to lose.”   

Instead of fighting in a bloody  civil war, Ukraine’s crypto revolutionaries are hoping to change the  structure of society by making the banks and governments that they  oppose obsolete. One of the country’s early crypto  adopters, Oleksii Mushak, even made his way into the post-revolution  parliament. 

Mushak is still an advocate for cryptocurrency, and despite  his political credentials, he thinks that this technology can free  people from oppressive governments. “It’s about not believing in the state,” Mushak says, adding that fighting oppression “is what Ukrainians have been doing for the last 1,000 years.”

 Mushak is hoping to work with the  blockchain community in regulating the industry, but generally, the  country’s new government has not been entirely friendly to crypto. This  year, authorities have shut down hundreds of mining operations and  raided multiple crypto-related businesses. Pavel Kravchenko, co-founder of  Distributed Lab, says that the system needs an entire overhaul, not just  a rearranging of leaders. Kravchenko said: 

“You can’t just change the president and decide there will be  change. You have to change the whole structure. You need a different  mentality.”   

Ukrainian Blockchain developer  Andrey Khavryuchenko says that the industry has the wealth and  capabilities to help build a new society on their own, instead of  depending on politicians. Khavryuchenko said: 

“We need to organize to improve the roads, the infrastructure, the  public utilities. Bitcoin and guns, that’s the only way to save this  country.”   

When asked if his words would seem scary to some people, Khavryuchenko responded: 

“Not scarier than 100 years of oppression. I have to prepare for  these contingencies. It’s not whether it will happen, it’s when."   

The New Era of Safe Haven Currency

Ukraine is not alone, many other  countries with struggling and collapsed economies have also found a safe  haven in cryptocurrency markets. Last month, CryptoGlobe  reported that cryptocurrency is quickly becoming a preferred medium of  exchange in Venezuela. Crypto has become so popular in the country that  the government has announced that they will be running their new  national currency on a petro-backed blockchain. 

Cryptocurrency will become more  and more relevant as the fiat currencies issued by struggling  governments continue to collapse. Although, as we have seen in countries  such as Venezuela, governments will attempt to co-opt the technology  and implement their own blockchain currencies, which will likely not  have the privacy features that crypto enthusiasts have come to expect. 

The Philosophy of Decentralization

Decentralization has become  somewhat of a buzzword in the crypto community, but it has a very  intentional meaning that goes back years before Satoshi Nakamoto.  Satoshi Nakamoto is the famous pseudonym behind the creation of Bitcoin,  and this elusive figure (or group) is typically credited with coming up  with the "idea" for cryptocurrency. However, Satoshi stood on the  shoulders of giants. There was a subculture of hackers  and anarchists who laid the intellectual foundation for the technology  that Satoshi later made a reality. 

This group called themselves the  Cypher Punks, and they extensively theorized the concept of anonymous  digital money many years before Bitcoin. 

They also believed that it  could be a tool to subvert central banks, and ultimately replace them.

 In fact, Timothy May, a senior  scientist involved in the early years at the Intel corporation,  predicted the rise of cryptocurrencies and smart contracts in his 1994  manifesto “The Cyphernomicon.” 

In the book, May prophesized about “sophisticated financial alternatives to the dollar, various instruments, futures, forward contracts, etc.”

 In chapter 16, May speaks of “Using software agents for money laundering and other illegal acts,” and goes on to say that: 

These agents act as semi-autonomous programs that are a few steps  beyond simple algorithms. Real use could be as “digital cutouts”:  transferring wealth to other agents (also controlled from afar, like  marionettes.) [The] advantage is that they can be programmed to perform  operations that are perhaps illegal, but without traceability….The rise  of AMIX-style information markets and Sterling-style “data havens” will  provide new avenues for money laundering and asset-hiding. Information  is intrinsically hard to value, hard to put a price tag on (it varies  according to the needs of the buyers) meaning that transnational flows  of information cannot be accurately valued (assigned a cash value.)   

Last year, May gave a presentation  at the hacker house Paralelní Polis in Prague where he recalled seeing  Satoshi’s now-famous white paper appear on one of his mailing lists. May  explained: 

“In the mid-2000s, around 2006-2007, a lot of people began  revisiting digital currency. In 2008-2009 through the ‘cryptography  mailing list’, the successor to the ‘cypherpunk’s mailing list,’ a  person going by the name of Satoshi issued a white paper proposing a  system which solved the Byzantine consensus problem in a novel way using  Proof-of-Work.”   

The emphasis on decentralization  among many early crypto adopters goes deeper than just making networks  more secure. This philosophy was born from an understandable mistrust of  traditional institutions, and a desire to replace them with  alternatives where centralization of power is physically impossible. 

I wrote this article @cryptoglobe