Currency Of Last Resort

I. Escape From Kyiv

“Do you hear that?”

Gleb Naumenko stopped talking and allowed me to hear the air raid sirens going off behind him in the Ukrainian night, deep in the west of the country, near the border with Romania. “I’m supposed to go to a shelter,” he said, “but I’m too lazy.”

We had been talking over video chat for hours about his escape from Kyiv, and his Bitcoin-powered humanitarian work inside Ukraine when the electronic wail pierced the silence behind him.

“Just last week,” he said, “I was staying with some friends in the nearby countryside. A Russian hypersonic missile blew up several buildings just a few kilometers from where we slept.”

On April 18, 2022, more Russian missiles exploded in the city of Lviv, not far from where Naumenko was living, claiming several lives. Today, nowhere in Ukraine is safe. Since February 24, Russian forces have launched more than 1,900 rockets into the country. On April 28, during a visit to the Ukrainian capital Kyiv by UN Secretary-General António Guterres, Putin’s army bombed the city, hitting a residential building, wounding 10 people and killing one. Lviv and surrounding areas were rocked by missile fire again on May 3.

In the 48 hours after Putin’s invasion, Naumenko — a Bitcoin core developer with hundreds of open-source contributions in the past year — made the decision to stay in Ukraine, even as many of his friends fled the country. In the first few weeks of the war, from his place in hiding, he raised more than 4 BTC (~$150,000) for humanitarian support.

These funds were received from donors across the world in a way that would have been impossible through the legacy financial system. With bitcoin, Naumenko has financed thousands of meals for the elderly in his bombarded hometown of Kharkiv; purchased hundreds of mattresses for the internally displaced in Kyiv; and even sponsored the construction of a 100-person refugee center outside Ivano-Frankivsk. Like many Ukrainians, Naumenko is now a full-time aid worker, and the rest of his life is part-time.

The mix of Bitcoin and humanitarianism is part of a broader national trend. In March, when the Ukrainian banking and payments system broke down, the head of the prominent “Come Back Alive” support group said that cash and cryptocurrency were the only options to buy critical supplies. But cryptocurrencies like bitcoin, he said, were “more convenient and reliable than cash,” as they enabled aid workers to receive donations instantly from anywhere in the world. Plus, bitcoin couldn’t be frozen, like Come Back Alive’s Patreon platform had been on the day the Russian attack began.

“At first, I didn’t think there would be an invasion,” Naumenko told me. His friends in the U.S. texted him, asking if he was OK, referring to the military buildup around the Donbas region of eastern Ukraine that they were watching on TV. He dismissed their concerns.

In the fog-of-war days in mid-February — when the Kremlin and its supporters denied any possible invasion and social media was filled with videos of an eerily quiet and normal Kyiv — Naumenko was optimistic for the future. Last summer, he boarded a plane to move to Canada, only to change his mind mid-flight. He had a 30,000-foot realization that he wanted to help build local communities in his homeland.

“Everything was getting better in Ukraine,” he said. After years of war, new businesses were finally coming into the big cities, and new restaurants were opening. The scene felt alive.

Naumenko moved from Kharkiv (which didn’t have many cryptocurrency developers) to Kyiv (which had a lot), and he began to meet like-minded Bitcoiners on a weekly basis. Coordinating everything on Telegram — the social media of choice in Ukraine — he met many open-source developers working on a new kind of financial future.

Naumenko’s interest in Bitcoin was initially sparked in part by the staggering collapse of Ukraine’s currency, the hryvnia. In the time since Satoshi first posted the idea for Bitcoin online in late 2008, 100 hryvnia has gone from buying you $20 to, today, only getting you around $3.

In 2016, Naumenko started working for Kuna, the popular Ukrainian cryptocurrency exchange, helping to build out their infrastructure. The more he learned about Bitcoin, the more he liked it. He contrasted working on Satoshi’s project to a career at Microsoft or Google, where you need to convince corporate leaders to make a change. In Bitcoin, he told me during our first interview in the summer of 2020, “all you need to do is show that your idea works. You don’t have to convince any masters.”

Back in Ukraine, Naumenko was inspired by how Bitcoin could improve civil liberties. This new currency, he told me, could help dissidents and opposition politicians raise money despite the State’s desire to freeze them out of the financial system; could allow people in pain to buy marijuana that the government didn’t want them to buy; and could prevent police from spying on the bank accounts of sex workers.

In 2018, Naumenko got the chance to work with Bitcoin giants like Greg Maxwell and Pieter Wuille as an intern at Blockstream, eventually co-authoring a paper with Maxwell and Wuille on a proposed Bitcoin improvement called Erlay, which could make the network more efficient and resilient. In 2021 and early 2022, Naumenko’s work on the Bitcoin protocol approached a new milestone.

Just days after the invasion, Naumenko released “CoinPool,” a new implementation of Bitcoin which would allow many users to share the same “UTXO,” or spendable piece of bitcoin. A compliment to the Lightning Network, and something that might help Bitcoin scale better and add privacy, CoinPool was the result of years of work with fellow developer Antoine Riard. The release would be an impressive achievement under any circumstance, but it was an astonishing scientific feat from the middle of a war zone.

On February 24, Naumenko was shaken from a dream by his buzzing phone. His friends were frantically texting him: The invasion was happening. He had assigned a small probability for this in his mind but only a tiny one. Only 12 hours earlier, he had been riding his new electric scooter to a coffee shop to read a book. The weather was gray and depressing. There was no one on the streets. He was overcome by a strange feeling. Only when he was jolted awake at 5:00 a.m. did he realize war had arrived. He threw together a backpack and hurried to a nearby metro stop, where he descended into a Soviet-era bomb shelter, built to withstand nuclear attacks.

He spent three days and two nights in the bunker. At first, when he went into the subway station, the old woman at the turnstile asked him to wear a mask. He looked at her, baffled. COVID-19 was over, and war had begun. More and more people and families with children joined him, bringing pillows and food, preparing to live there. The initial shock of war drove crowds underground, but after a few days, out of necessity, people started to return to their terrestrial lives.

When Naumenko finally left the shelter, he met up with friends and decided to leave the city in a pink BMW. The car was ostentatious but was the only one available. They were afraid their ride might bring too much attention but decided to use it to split west anyway. The Russian army was in the suburbs outside of Kyiv, killing civilians, and they could hear the firefight. Time was of the essence.

Naumenko’s friends disappeared into Romania, but he asked to be dropped off in a Ukrainian town right before they crossed the border. He wanted to stay and help.

II. The Toll Of Putin’s War

Headlines out of Ukraine today look disturbingly similar to the most tragic periods in the nation’s history: More than ten million displaced. Cities flattened. Millions of refugees. Land and crops seized. Industrial production destroyed. Mass deportations. Planned massacres.

Putin’s initial military plan may have been a quick decapitation of the democratic leadership in Kyiv, followed by an occupation of most if not all of the country. If these were his objectives, his army failed. Perhaps due to a lack of experience, a lack of morale, a lack of training, a stronger-than-expected response from the Ukrainian defense, corruption in military management, old Soviet-era equipment, or some combination of these factors, Putin was unable to take Kyiv.

According to Russian historian Kamil Galeev, the Kremlin “didn’t plan for a war, it planned to ‘liberate’ Ukraine … but it turned out that Ukrainians didn’t want to be saved.” Galeev wrote that Putin’s invasion was actually envisioned and planned as a “gift or humanitarian operation,” which is why the fierce resistance has been so shocking to the foreign troops. Ukraine’s “ingratitude and refusal to become Russian,” he argues, helps explain why the Russian army has been so terribly brutal.

Putin’s forces stalled in their initial westward push by the end of March and began retreating east. Against the odds, Ukrainian forces won the Battle of Kyiv. In early April, a string of previously Russian-held towns and citizens began to be liberated. On April 2, images emerged from the wake of the Russian retreat: Hundreds of executions, often people with hands tied behind their back, littered in piles of dead bodies on the streets. In the town of Bucha, according to local authorities, every fifth citizen who remained was murdered by Russian troops.

Even as it inflicted maximum brutality, the Russian army suffered staggering losses in the first two months of its campaign. Troop deaths range from “official” Russian numbers of somewhere between 1,000 and 2,000 to leaked Russian numbers well north of 20,000. This would be, for context, more deaths than the Soviets encountered in Afghanistan, and nearly three times what the American armies suffered in 20 years of fighting in Afghanistan and Iraq. The destruction of infrastructure has been just as staggering. Open-source investigators have tracked Russian losses of more than 3,200 pieces of military equipment, including nearly 600 tanks, 100 APCs and 25 aircraft. In mid-April, Ukrainian missiles sank the Moscova, the flagship of Russia’s Black Sea fleet. It was the largest ship sunk in combat since World War II.

In early April, the Russian army began to regroup in eastern and southeastern Ukraine. The military also shifted its strategy from occupation to siege warfare and destruction: Cities like Mariupol and Kharkiv were decimated from the air (Putin’s troops had practiced plenty of aerial destruction in Syria) and cities like Chernihiv, unable to be seized, were sealed off from the outside world.

First-hand accounts from inside the siege at Chernihiv are brutal to read: no water, no electricity, no cell signal, dwindling food and medical supplies, and constant shelling from the Russians, slowly killing those who remained. A similarly grim situation is playing out in Mariupol today, where the Associated Press reported that Russian airstrikes killed 600 seeking refuge in a theater. All across Ukraine, the Russian army has committed a litany of war crimes, brazenly targeting civilians in violation of the Geneva Conventions.

As of the publication of this article, the war has shifted to the Battle for Donbas, with Putin’s forces trying to encircle and push the Ukrainians out. As much as 70% of the population in areas around Donetsk and Luhansk has fled since February. Meanwhile, the Ukrainian army is launching a counteroffensive and looking to reclaim territory in Kherson, Sumy and Kharkiv. Moving forward, the Ukrainian army expects a “scorched earth” policy to come from future Russian military attacks: artillery and air strikes, followed by ground invasions. Putin’s new goal appears to be control of the Donbas and of southern Ukraine, where Transnistria might be used as a base for a push to take Odessa. With control of the east and south of Ukraine, Putin would control much of the world’s production of essential materials like steel and neon.

The ongoing violence is making Putin’s regime less popular among Russian-speaking Ukrainians in the Donbas, according to officials and aid workers. The ongoing siege of Mariupol — where as many as 20,000 citizens may have perished — has changed minds. According to the mayor of Kramatorsk, located to the north of Mariupol, 60% of the town might have been pro-Russia in 2014, but today he estimates that support has dwindled to 15%.

Europeans and Americans were, by and large, horrified by Putin’s invasion, but Brazilians, Indians and Chinese were less so, even at times pushing a narrative that Putin was a victim of the West’s aggression, and that he had no choice but to invade. Inside Russia, citizens have been fed constant propaganda, and many have rallied behind Putin. They are being told that the Russian army is fighting Nazis that tried to attack the Donbas. Or even more extreme, that the U.S. had installed biolabs in Ukraine to create new kinds of weapons to kill Slavs.

Within the first few weeks of the war, the Russian stock and bond markets collapsed, the ruble cratered, and more than $400 billion of the central bank’s non-gold reserves were frozen by G7 nations. A comprehensive sanction scheme was placed on Putin and his leadership, including asset seizures in the West. But by early April, Russia had partially recovered.

Germany and wider Europe have been unable to stop buying gas from Putin, giving him the incoming cash he needs to sustain the war. Germany has been paying Putin around $200 million per day for energy at the same time as their supplier is committing war crimes. As of April 30, the EU had paid Moscow a staggering €43 billion for fossil fuels since the invasion. Despite cutting Russia out of the SWIFT network, despite the G7 freezing its national savings, and despite many major international companies refusing to do business in Russia, European energy purchases are estimated to be able to sustain Moscow’s war for the next two years.

The U.S. also allowed Putin to make bond payments through its banks in New York, helping to prop up Russian sovereign debt. Putin began forcing foreigners to buy Russian exports in rubles — and forced Russian businesses to sell their foreign currencies for rubles — generating artificial demand and bringing the ruble back to its pre-war value by the first week of April.

However, the economic outlook remains bleak for the wider Russian population. Central bank head Elvira Nabiullina spoke recently about how the logistical blockade “hurts even more than the financial sanctions … supply chains are broken, inventories will run out very soon, and inflation will soar.” The mayor of Moscow said that 200,000 people are at risk of losing their jobs in Moscow alone. Price inflation has surged past 20%. Russia’s deputy prime minister said that economic stimulus to fight the crisis without causing further inflation was limited to 8 trillion rubles, but that they’d already reached that amount by mid-April.

On the other side, Ukraine has been devastated. The country’s defense industry has been mostly destroyed, as has much of its core and medical infrastructure. Russia’s blockade of Ukrainian ports is strangling the country’s economy. In cities like Mariupol and Chernihiv, electricity, water and the internet have been wiped out. The military has also taken unknown but heavy military losses, with deaths in the thousands. Civilians have paid the highest price, with tens of thousands perishing on the frontlines.

As of mid-April, Putin’s invasion created more than 6.5 million internally displaced Ukrainians, and 5.3 million Ukrainian refugees, now living in Poland, Romania, Germany, Russia and elsewhere. In total, a staggering 30% of Ukrainians have fled their homes. The refugee crisis is comparable in scope or even larger than similar crises in Syria or Somalia or Venezuela, but it’s taking place in a matter of days and weeks, not years.

The hryvnia’s prospects for post-war value are dim. As financial historian Adam Tooze has pointed out, European banks don’t want to take on hryvnia liabilities, thinking it may trend to zero. In the first six weeks of the war, the damage to Ukraine’s economy exceeded $500 billion. On the eastern front, Russian forces are committing monetary imperialism, trying to replace the hryvnia with the ruble town by town.

Though reluctant at first, the EU and U.S. have deployed more than $10 billion of aid and high-tech weaponry to the Ukrainian military. Kyiv has also been able to purchase highly effective Bayraktar TB2 armed drones from Turkey despite Russian complaints. Javelins and drones have been highly successful in destroying Russian tanks, which are seen littering the ground in eastern Ukraine on satellite imagery.

As a result of his surprisingly valiant defense, President Volodymyr Zelenskyy himself is now arguably the most popular European leader since Winston Churchill, gaining a near-mythical status among large parts of the continent for his decision to stay in Ukraine and command the defense of his country from the frontlines. Putin, on the other hand, even with support from some governments, has become a pariah. With Turkish, Kazakh and Chinese authorities questioning his invasion, or working in some way with Ukraine, some of his closest allies have abandoned him. He still has Belarus — for now, despite opposition from virtually the entire Belarusian population — but even his loyal Chechen servant Ramzan Kadyrov has publicly criticized the Russian war strategy, a crime that would now be illegal in Moscow.

Inside Russia, the country has veered toward totalitarianism. A wave of initial dissent against the war died out as Putin crushed civil society: Independent media, human rights groups and opposition organizations were shuttered. Tens of thousands were arrested. All major independent media and human rights organizations were closed at the outset of the war, leaving state propaganda as the dominant news source.

In mid-April, in a series of more than 100 street interviews with different kinds of people in Moscow, a correspondent found that 50% still supported the war. One result of strict sanctions is that Russians, like many in countries like Cuba or Iran, may “hate the west and consolidate.” Hundreds of thousands of Russian citizens, meanwhile, have fled to Georgia, Armenia, Turkey, the UAE and beyond, looking for work and a continued connection to the outside world as their homeland is sealed off. It is estimated that as many as 170,000 tech workers alone have fled or will soon flee.

As the conflict wears on, bitcoin and other cryptocurrencies such as Tether are playing a growing role, providing a “Plan B” where the legacy financial system is failing. For Ukrainians who have fled into Europe, Bitcoin might be a precious refugee technology, allowing them to bring their wealth with them or enabling them to receive value directly from friends and family in America. For the Ukrainian government, cryptocurrency is acting as a helpful lifeline, providing more than $100 million for much-needed bulletproof vests, night-vision goggles and medical supplies. For Russians cut off from the outside world, or for the hundreds of thousands of Russians who fled their country, Bitcoin can be a bridge to business and family abroad. As for the Russian government, its use of Bitcoin remains a matter of speculation. But at the end of March, the head of Russia’s State Duma committee on energy said that the country would consider taking bitcoin payments in exchange for oil.

Not so much in the news these days are the Crimeans and Russian-speaking Ukrainians living in the occupied Donbas. For this story, I was able to speak to a Crimean Bitcoin educator living in Luhansk. He was able to help shed light on the unique role Bitcoin is playing, even in one of the most chaotic places on Earth.

III. Bitcoin On The Frontlines

Aleksey is Crimean by birth but speaks to me in early April on a Telegram call from inside Luhansk, where he lives just a few minutes drive from the Russian border. He is there taking care of his wife’s elderly mother and lives under the rule of the separatist Luhansk People’s Republic (LPR). He is against Putin’s war but doesn’t think the dictator is the only one responsible for the suffering.

Aleksey was born in the USSR but was only four years old when it fell apart. He was born into a community of Russian speakers. In the summer of 2008, under President Viktor Yushchenko, he said the cinemas in Crimea started showing Ukrainian language movies, when everything used to be in Russian.

He said that, in Donetsk and Luhansk, the authorities started shifting public schools to Ukrainian-only, with no Russian options. You could still send your kids to a private Russian-speaking school, but at a state school, Ukrainian was the only option.

“I was like, what the hell was going on?” he told me. He spoke and understood Ukrainian, but these changes felt strange. Around that time, Aleksey decided to pursue a career abroad, working on cruise ships in the U.S. and UAE, so he wasn’t in Crimea for the 2014 invasion. His parents — who came from a Russian Orthodox background — voted to join Russia in the controversial referendum.

Growing up, Aleksey felt that there was always tension between eastern and western Ukraine. “For example, if you went to Lviv, some people wouldn’t even speak to you if you spoke Russian.” This tension has roots in hundreds of years of conflict and history.

Despite his background, Aleksey did consider Viktor Yanukovych as Putin’s puppet. The Donbas was obviously pro-Yanukovych, but Aleksey wasn’t sure which way Crimea leaned. “We were an autonomous republic, and had our own mini-leader. We’d like to make our own decisions,” he said.

“I always tried to steer away from politics,” he told me. “This is impossible to do today, but I tried to do it then. I never felt like I could really get the truth, so I tried to stay quiet.”

Aleksey had acquaintances on both sides of the barricades in Kyiv’s Maidan during the 2013–2014 protests. One of his good friends was a policeman that was sent there to enforce order, and a few others were standing him down, shouting for democracy. The ones on the regime side, Aleksey said, didn’t really want to attack their countrymen, but they had orders.

“I’m very angry and upset at the people who initiated this conflict,” he told me. “Both governments,” he said, “are guilty of messing with people’s lives.”

In 2016, he went back to Crimea. Lots of people, he said, were actually happy about the new Russian rule because of the infrastructure improvement. Putin spent significant sums there to modernize things. What’s more, Aleksey said, when the Ukrainian side cut off the water supply to Crimea, this allowed Putin to craft an image of having people’s backs.

When the COVID-19 pandemic and lockdowns started, Aleksey’s wife lost her job in Abu Dhabi. They had met there, working abroad, but in the summer of 2020, they came back to her elderly mother’s home in Luhansk to look after her. It was impossible to get a flight to Ukraine, so they flew to a nearby city in Russia, made it to the border, and walked across. For the past year and a half, he’s been freelancing online for work.

“I’m here in Luhansk,” he told me as we started our conversation, “10 miles from the Russian border.” Even though he’s on the frontlines, he said he didn’t know until February 25 that there would be a big war. He was used to bombings and gunfire, which happened mostly to the south of where he was in the city of Luhansk. Downtown, he said, was mostly fine.

He told me about what it was like to live under the LPR separatist authorities. Conscription had begun: Many people were taken away to fight in the west. Aleksey himself wasn’t militarized, because he doesn’t have an LPR passport. But locals have to do what Putin says. He wasn’t sure if there had been any local elections recently: “I’ll have to ask my wife,” he said.

Luhansk and its rich history, like many other cities in the region, are victims of the conflict. Before, he said, the city was packed, vibrant with students, including many from as far as India and Nigeria. But not anymore. “The city looks,” he said, “like it’s fading away.”

Aleksey said that anyone over the age of 45 only follows Russian media and is “100% one-sided” in their view of the conflict. The independent channels, which showed a more pro-European perspective, were kicked off TV as soon as the war started.

Aleksey’s neighbors believe that the Nazis are in control of the Ukrainian government, pulling the strings behind Zelenskyy. If Russia did nothing, then these Nazis would take over the Donbas, and they would attack Russia. So by invading, Putin is playing a noble role in stopping the Nazi attack.

To better understand the outside world, Aleksey tries to balance his sources of information. He reads the Russian and Ukrainian sides. He follows the anti-war Libertarian party in Russia on Telegram, as well as Bloomberg and the BBC. And the Moscow side? “That’s not hard to find,” he said, laughing.

Despite his background, and skepticism of Kyiv, his views are closer to Western than Putinist. He said this makes him a tiny minority in the LPR. “In these areas,” he said, “people support the Moscow model.”

In the summer of 2017, while he was in Dubai, Aleksey stumbled upon Bitcoin accidentally. He had obtained a master’s degree in economics back in Crimea (Keynesian instruction, not Marxist, he joked) but wasn’t happy about the framework it provided. Aleksey is a big fan of Stephan Livera’s podcasts, which focus on Austrian economics and anarcho-capitalism. However, he thinks these are utopian ideals and not possible to reach. He’d be happy with some progress in that direction, toward minarchism and smaller government.

When Aleksey found out about Bitcoin, he realized it could be a solution to a lot of problems that people like him faced. He got hooked, spending all of his spare time for nearly two years just reading about Bitcoin. One day, he shared one of Parker Lewis’ “Gradually, then Suddenly” essays with a friend in Crimea, but his friend couldn’t understand it. “We study English in Crimea,” Aleksey said, “but most people aren’t fluent.” So he decided to translate Bitcoin articles into Russian. He started with one of Parker’s writings, and one from the price-modeler Plan B.

He credits his mother and grandmother with his desire to educate the public. “It’s in my blood: I wanted to share information for the people. I saw so many who didn’t know about Bitcoin, or what the value was behind it, and I wanted to change that.” Today, Aleksey’s website, 21ideas.org, is the most extensive Russian-language Bitcoin resource on the internet, run impressively from one of the most unlikely places on Earth.

Aleksey points out that both the hryvnia and the ruble have lost massive amounts of value against the dollar in the past decade, which he thinks will turn more people toward Bitcoin. Before that, he said, the 1990s “were a disaster for all of us. The purchasing power was sucked out of our currency. Everyone was a millionaire. but it didn’t mean anything.” Local fiat, he said, has lost half its purchasing power since August. And there’s Luhansk-specific inflation, too. Inside the LPR, tea might be 200 rubles, but in Russia, just a few minutes away, it can be 120.

Right now, Aleksey said, it’s actually easy in Crimea and Russia to exchange bitcoin to rubles through a variety of services. “But in Luhansk,” he said, “we’re stuck.” The other day he saw an 80-year-old woman, with a bed sheet full of paper hryvnia notes, waiting in a line outside of a bank, trying to exchange it for rubles. The public took so much pity on her that no one tried to steal. He said people in the LPR are “preppers” and save up for bad times. “Bitcoin,” he said, “will be a natural fit for them.”

If Aleksey wants to buy bitcoin, he can use any of the services found on the ranking site Bestchange.ru, which pairs buyers and sellers, who trade bank wires and bitcoin. But if he wants to spend bitcoin, he has to drive to Russia to swap it for cash. Many key goods — like medicine, feminine products, pet food — have disappeared in Luhansk. His wife, he said, was actually in the car on the way to Russia to get some of these things as we spoke.

When asked about the use of bitcoin by the Ukrainian and potentially Russian governments, Aleksey said he “wasn’t surprised” that the Ukrainians raised money via cryptocurrency, but said he doesn’t think bitcoin matches Putin’s goals. “We’re getting close to totalitarianism in Russia,” he said, “and Bitcoin doesn’t fit that framework.”

Maybe, Aleksey said, Putin could force people to use a government wallet, with mandatory “KYC” policy, where users would have to tie their ID to their accounts, making for an effective surveillance machine. But he doesn’t think such a plan would work out. Today, for example, in Russia, it’s forbidden to accept bitcoin or any other cryptocurrency in exchange for goods or services. Only the ruble is legal tender. But there are still gray markets and people interacting in a peer-to-peer way. “Life,” he said, “finds a way.”

“Bitcoin will give more freedom to people in Russia,” he stressed. “Just look at me, here in Luhansk. I have more freedom today because of Bitcoin. I’m not freaking out about my bank account. I know how to protect my savings.”

Aleksey mentioned a neighbor, whose child works abroad and tried to send money back home. A bank wire was impossible, and they gave up after trying to find a “mule” willing to do the deal. In another example, he tried to send money to his wife’s friend in Kharkiv but couldn’t get the banking system to work. He also adds that the Federal Security Service of the Russian Federation (FSB) is starting to track and detain people who send money from Russia to Ukraine. “Bitcoin,” he said, “transcends all of this.”

“I don’t want to make it sound like communism,” he said, “but Bitcoin is similar in that it can unite many different kinds of people. You put two Bitcoiners in the same room, one a neurosurgeon and the other a gold miner, and still they will find common ground.”

Today, thousands of people have learned about financial empowerment through 21ideas.org, which Aleksey keeps going from his hideout in Luhansk. The website, strictly speaking, wouldn’t exist without Bitcoin. His previous hosting service Ghost doesn’t accept bitcoin and no longer accepts Russian credit cards because of Western sanctions. But the hosting service Njalla does accept bitcoin, so his resource lives on, helping people learn how to escape from financial repression.

“My wife’s house burned down in 2014,” he said, as we reached the end of our conversation. “It wasn’t a direct hit from a missile but was sparked by an electricity problem due to a military-related power surge. We lost everything.”

“But if we had to flee today,” he said, “even if our house burned down, we’d be OK. I have my seed phrase in my head. I’ve memorized the 12 sacred words. I hold the key to our future.”

IV. We Will Go To Heaven, And They Will Simply Die

It’s worth noting that Gleb Naumenko is far from the only Bitcoin developer caught in the current conflict. A ​​Moscow-based Russian developer named Anton — who created Lnurl-pay, a way to spend Lightning and pay out in rubles or hryvnia — has recently been arrested in Moscow for protesting the war and wrote a scathing post condemning the invasion. The creator of the popular Simple Bitcoin Wallet, Anton Kumaigorodski, is a Ukrainian developer who took up arms to defend his country. Hennadii Stepanov, a developer supported by Brink, a London-based nonprofit, also hails from Ukraine.

Bitcoiners from Russia or Ukraine — or even those who have friends or family in the region — tend to be ardently against Putin and his war. But some Bitcoiners in the West take — or at least took, in the weeks after the invasion — the Kremlin line that the war was somehow NATO’s fault.

The day after the invasion, Naumenko tweeted a link to support the Ukrainian army with bitcoin and cryptocurrency. He received many replies, with more than a few calling him a warmonger.

Naumenko has bigger concerns than scraps on Twitter. “When I was in the bomb shelter, surrounded by foreign invaders, I removed my name from my Twitter handle and locked my account. I deleted the Twitter app from my phone. I didn’t want soldiers to see who I was if I was caught. It might have been the end of me if they had arrested me and seen my post supporting the Ukrainian army.”

But still, he told me that he wanted to be very clear about something: “What happened is a blatant, illegal invasion. I’m tired of hearing how Ukraine’s freedom from Russia is a U.S. intelligence operation, and how helping Ukraine to defend itself is bad,” he said. “To my friends in America, please remember that the Russian oppression of Ukraine is a much longer story than the existence of your entire country. Even as a libertarian, you’re supposed to defend other peoples’ right to defend themselves. This understanding has been lost.”

“I know a lot of libertarians in Ukraine and Russia,” Naumenko continued, “and they ALL oppose the invasion and don’t make apologetic arguments. They think supporting Ukraine is good. The Russian libertarians even support providing Ukraine with weapons. They know what Putin is.” One can be a dogmatic libertarian, or an anarcho-capitalist, he said, but this only works if your country isn’t at risk. To paraphrase Mike Tyson, “Everyone has an ideology until they get punched in the mouth.”

The surprisingly common angle in the Bitcoin community that the war isn’t Putin’s fault is important to address. For the purposes of this essay, a short overview of Ukraine’s history will be helpful, to establish the fact that Ukraine has been in the process of statebuilding — and resisting foreign attacks, invasions and occupations — for nearly 1,000 years. This reality is encased in the country’s national anthem, which begins with the words: “Ukraine has not yet perished.”

A few weeks ago, one of Russia’s biggest educational textbook manufacturers (named Prosveshcheniye, or “education”) ordered a purge of all references to Ukraine from history, literature and geography school books. Why would the Putin regime be so afraid of history? In his book, “The Gates of Europe,” Harvard scholar and historian Serhii Plokhy explains why.

Plokhy’s book gives a detailed overview of Ukraine from the time of the Ancient Greeks and Romans until today. He paints Ukraine’s rich history, linked to but distinct from Russia, unquestionably its own national identity at the nexus of Europe and Asia. He charts the journey of Ukrainian nationhood as it ebbs and flows through what seems like tragedy after tragedy over the past millennium.

Going back to the beginnings of recorded history, Plokhy begins with the geography of the Dnipro river, a symbol of the nation, mentioned in Ukraine’s national anthem. Europe’s fourth longest river, its waters and rich basin planted the seeds for Ukraine. Its right and left banks have often been the border between east and west.

The Dnipro’s fertile soil always made it a breadbasket for commerce and agriculture. Plokhy charts how Cimmerian, Scythian and Sarmatian dynasties traded and fought in the region with Mediterranean empires, eventually giving way to Viking rule. Kyiv thrived in the high Middle Ages, as “Kyivan Rus,” especially under leaders of Norse descent like Yaroslav the Wise, until it was brutally conquered by the Mongols in 1240. Kyiv wouldn’t recover from the attack of the sons of Genghis Khan, economically or politically, for centuries.

A central theme of Plokhy’s book is that from the early Middle Ages, Kyiv continued to fall under various foreign influences. For example, the Polish and Lithuanian empires ruled in Ukraine for centuries, leaving their own indelible mark. Later, inhabitants came into conflict with the Ottoman Empire and its pernicious slave trade. In the 16th and 17th centuries, as many as 3 million Ukrainians and Russians were sold off as slaves on the coast of the Black Sea.

The Cossacks — who play a significant role in the story of Ukrainian national identity — famously rebelled against the Turks and their Tartar allies, allying with the Poles to push out the Ottomans. Eventually, the Cossacks turned and ousted the Poles, fashioning the “Hetman” state in 1648, the groundwork for modern Ukraine. This set the stage for the next half-century, a period known as “The Ruin,” filled with constant fighting between eastern and western forces on either side of the Dnipro. Toward the end of the strife in 1710, Cossack leader Pylyp Orlyk wrote Ukraine’s first constitution, which established a separation of powers between the executive, legislative and judicial branches more than a half-century before such events would occur in America.

Not until Catherine the Great in the late 18th century did the Russian Empire finally conquer most of Ukraine. Her forces began several hundred years of direct rule from Moscow. Ukraine became an economically critical piece of the Russian Empire, accounting for as much as 75% of all Russian exports by the mid-19th century. Moscow tried to cement its control over the Ukrainian region but became mired in conflict with the Austrian Empire.

In the western regions of Galicia and Lviv, Plokhy explains that the Austrian Empire allowed space for Ukrainian thought, research and culture — not out of empathy but out of geopolitical rivalry, wanting to weaken Russian influence in the region. The Ukrainian poet Taras Shevchenko pushed a competing narrative of independence against the dominant cultural narrative of Russian poet Alexander Pushkin, which pushed subservience.

The Russian leadership saw an independent Ukraine as a threat to its own empire. A linguistic and religious divide established itself, between Ukrainian-speaking Catholics in the west, and Russian-speaking Orthodox in the east, that remains relevant to this day.

As the Austrian–Russian conflict wore on in the 19th century, industrialization became a significant force. Factories in southern Ukraine created a massive amount of economic growth and jobs. Railways from St. Petersburg and Moscow linked up to Crimea and Odessa, making the Black Sea a popular destination for Russian elites.

In October 1905, more than 2 million Russians and Ukrainians went on strike against the tzar, who conceded a few civil liberties as a result, created a parliamentary body and lifted restrictions on the Ukrainian language. Ukrainians liberals, based in the Lviv area, began to publish their own media outlets.

World War I, however, halted any positive progress. Once the Austrian forces collapsed, the Red Army invaded from the East, the Poles pushed back with a Ukrainian force, and the White Army fought in the south. Meanwhile, an invisible fourth army, typhus, attacked everyone.

The Red Army managed to push all the way into present-day Poland but was stopped just short of Warsaw. Ukraine had a short-lived independence as the “Ukrainian People’s Republic” from 1918 to 1921, before Moscow fashioned Ukraine into a Soviet republic. Ukrainians from around the world came home to help build a new nation, but, as they soon discovered, their hopes for true independence were short lived.

In 1929, Joseph Stalin began to purge thousands of Ukrainian elites. He also pushed a policy of forced collectivization — which nationalized 99% of Ukrainian farmland — causing a massive famine, where as many as 2 million died as food production passed hands from individual farming units to a malfunctioning statist apparatus. As Plokhy details, one out of every eight Ukrainians died in the this episode, known as the Holodomor, which has since been classified as a genocide.

In 1937 and 1938, Stalin purged 270,000 intellectuals and dissidents. Half were executed. The combination of famine and destruction of human leadership weakened Ukrainian sovereignty for decades. Between 1929 and 1939, the population of Ukraine fell from 29 to 26.5 million. The Soviet secret police deported another 1.25 million Ukrainians during the outbreak of World War II.

Ukraine was the tragic focus of Hitler’s vision of “lebensraum” — a place to house and feed the German people. When the Nazis arrived in Ukraine, some locals were hopeful: Stalin had been so awful. But the Nazis were just as bad, if not worse. Under German occupation, Ukraine would lose 7 million citizens, 1 million of them Jews. Every sixth Jew who died in the Holocaust came from Ukraine.

An example of the magnitude of Nazi violence was a massacre at Babi Yar, just outside Kyiv. Jews were lined up the day before Yom Kippur, thinking they were being resettled, but they were shot instead and dumped into mass graves. A total of 33,761 civilians were murdered in just two days. The Nazis starved Ukraine’s cities, forcing people to head to the agricultural areas to farm to feed their war machine. A staggering 2.2 million Ukrainians were also captured and enslaved to work in Germany, where many died.

The Soviets — who had killed millions of Ukrainians in the 1930s — were greeted as liberators when they finally pushed out the Nazis in 1943 and 1944. Even after the war, conflict continued to tear Ukraine apart: More than 750,000 Poles and Jews were deported West. In Crimea in 1944, the People’s Commissariat for Internal Affairs (NKVD) went house to house, expelling 180,000 Tartars from their homes and 40% would die within the first five years in exile.

World War II’s toll on Ukraine was stark: Plokhy assesses that 15% of the population perished and 10 million lost their homes. Around 700 cities and 28,000 villages were obliterated, along with 40% of the nation’s wealth and 80% of its industrial and agricultural infrastructure. The crushed nation could only produce 25% of its prewar industrial output. Famines hit Ukraine again 1946 and 1947, and almost a million more perished, a tragedy made worse by Stalin’s insistence that Ukraine export grain that it badly needed to feed its local population.

The Khrushchev era was better for Ukraine: Hundreds of thousands of “terrorists” were rehabilitated, and Moscow bought more grain abroad instead of expropriating it from Ukraine. But price inflation persisted into the 1960s. And Stalin-era controls on human rights returned with Leonid Brezhnev, along with labor camps for freethinkers. Between 1966 and 1985, Ukraine’s industrial growth rate decreased from 8.4% to 3.5%, while agricultural growth slowed from 3.2% to 0.5%. These, of course, were the official numbers. The reality was worse.

During the Soviet era, Moscow became increasingly reliant on hard currency from abroad and sold Ukrainian gas to get it. Communist bureaucrats spent Ukraine’s precious resources to finance their imperial designs, stealing the wealth of the country’s future generations.

In April 1986, the worst nuclear disaster in history happened in Ukraine, less than 70 miles north of Kyiv at Chernobyl. The plant was largely run by Russian apparatchiks, not Ukrainian engineers. Their negligence led to a meltdown. As Plokhy tells it, the explosion released 50 million curies of radiation, the equivalent of 500 Hiroshima bombs. A territory larger than Belgium was contaminated. The city of Pripyat, which housed 50,000 workers near the power plant, became a modern-day Pompeii, frozen in time.

Ukraine’s leaders were not allowed to inform the public about the accident. On May 1, Mikhail Gorbachev held a May Day parade in Kyiv, even though the radioactive cloud was blowing right through the city. More than 3 million people were affected. The nearby forests, which had historically been such a rich asset for the Ukrainian people, became radioactive.

The only silver lining from Chernobyl, Plokhy says, is that public anger over the accident sparked a new independence movement. Dissidents from the 1960s and 1970s, now out of the gulags, took advantage of new civil liberties emerging under Gorbachev’s political opening, known as glasnost. The Ukrainian Catholic Church was legalized, and the narrative of the Cossack state was revived. Truths were told about the Great Purge, the Great Famine and the resistance fighters who fought the Soviets in the 1940s and 1950s. The Society of the Ukrainian Language ballooned to hundreds of thousands of members.

In October 1990, a student hunger strike against protest restrictions in Kyiv broke out into a city-wide movement: the “Revolution on Granite.” George H. W. Bush delivered his infamous “Chicken Kiev” speech in 1991, cautioning against “suicidal nationalism,” but he couldn’t stop the tide of history. On August 19, 1991, the parliament in Ukraine held a vote on the back of a “thousand-year tradition of state-building” after a speech by the longest-serving gulag prisoner, Levko Lukianenko, now an MP. The vote was a shocking 346 yes, with only two against.

Previous efforts at independence had failed, but now Ukraine was finally a country. Boris Yeltsin’s government at the time tried to clarify that Crimea and the Donbas region were “areas of contention,” presaging the conflicts of today. But on December 1, 1991, 90% of Ukrainians supported independence, with 99% in Western Ukraine, but 83% in Donetsk and even 54% in Crimea. This was the end of the Soviet Union. Gorbachev resigned on December 25, 1991. The USSR flag was brought down in Moscow and the Russian tricolor was raised up.

In 1994, Ukraine was persuaded to give up the world’s third largest nuclear arsenal. Russia, the U.S. and the U.K. gave security assurances, and Ukraine became the third-largest recipient of U.S. aid after Israel and Egypt. But independence wasn’t easy: Ukraine suffered a catastrophic economic decline. Unlike Russia, Kyiv had no oil to help the shock of transition. The metal industry depended on Russian natural gas which became much more expensive. State-planned companies continued to be subsidized, eating up national reserves, and hyperinflation peaked at 2,500% in 1992.

Between 1991 and 1997, Ukrainian industrial production fell by 48% and GDP fell by 60%. This was worse than America’s economic losses during the Great Depression, where industrial production dropped by 45% and GDP by 30%. By 1999, Plokhy says, only half of Ukrainians had enough money to eat. Only 2–3% were comfortable. Due to high mortality and low birth rates, the country lost nearly 3 million people between 1989 and 2001.

In the 2000s, oligarchs under Leonid Kuchma sparked life in the Ukrainian economy, with the GDP doubling based on exports like steel (Ukraine is home to two of the world’s largest steel plants, including the currently besieged Azovstal). But the population was tired of corruption. As Plokhy details, “Kuchmagate” exposed a president that was definitely a thief and maybe a killer. In 2004, Yushchenko survived a dioxin poisoning and rigged elections and, with the support of massive protests, became president in the Orange Revolution.

But Yushchenko couldn’t fix the corruption problems, which only got worse under his successor Yanukovych, who ruled in the image of Putin and focused on building an authoritarian state. Yanukovych rewrote the constitution, jailed his main opponent and stole as much as $70 billion.

In November 2013, hundreds of thousands of people streamed into Kyiv to demand an end to corruption and closer ties with the EU. Protests rocked the capital for three months, culminating in shocking violence in February, when state snipers fired on protestors. “The Heavenly Hundred” were martyrs for a free Ukraine and marked the end of 22 years of nonviolent Ukrainian politics.

On February 21, 2014, Yanukovych fled, leaving behind a vast and literal paper trail of corruption. The next day, Putin decided to “return” Crimea to Russia. On February 26, Russian secret services installed a new pro-Russian leader (who had only won 4% of the vote in a previous election) and cut off the independent media. During the independence referendum that Aleksey’s parents voted in, election manipulation was widespread. In Sevastopol, for example, the pro-Russia vote was 123%.

That spring, the Donbas operation began. The Donetsk and Luhansk People’s Republics declared independence with support from Moscow. In July 2014, Russian separatists shot down Malaysia Airlines Flight 17, killing the 283 passengers and 15 crew on board. This mobilized worldwide and domestic support against Putin’s operations in Ukraine, but the conflict’s toll on citizens remained enormous. In 2014, Ukraine’s GDP shrunk by 6.6% and by another 10% in 2015. The War in the Donbas claimed more than 14,000 lives before February 2022.

It’s important to keep Ukraine’s long and tortured history in mind. There are legitimate historic reasons for Russian-speaking Ukrainians, like Aleksey and his family, to feel closer to Moscow and to distrust Kyiv. These reasons have roots in hundreds of years of history. But there is no excuse for Putin’s war, in what marks the first time that a major European power has attacked a weaker neighbor since the end of World War II.

And it’s not just Putin to blame: Many of Russia’s top economic, cultural and media elite have been cheerleading the war for months. At the end of April, on Russian state television, guests openly mused on the idea of annihilating Ukraine with nuclear weapons. “We will go to heaven,” one talking head said, “and they will simply die,” echoing a phrase Putin coined to dehumanize his opponents.

In this dire environment, Zelenskyy’s administration — confronted by existential risk, and under continuous assault — became the first government in the world to ask for help in the form of Bitcoin.

V. Ukraine’s Bitcoin Adoption

In the days immediately following the invasion, Zelenskyy’s government allied with Ukrainian entrepreneur Michael Chobanian to start a historic effort to raise funds in bitcoin and cryptocurrency. The initiative was posted by the government’s official @Ukraine Twitter handle on February 26, 2022, and would end up attracting tens of millions of dollars worth of digital currencies. Chobanian — recently profiled by Bloomberg as “taking up Bitcoin instead of taking up rifles” — is the founder of Kuna, the cryptocurrency exchange which helped start Gleb Naumenko’s Bitcoin career.

Chobanian has worked with deputy minister of digital transformation Alex Bornyakov to raise more than $110 million worth of cryptocurrency for their country’s defense effort. The funds have financed thousands of bulletproof vests, helmets, night-vision goggles, and large quantities of medicine and other aid. When I spoke to Bornyakov in early April, he told me that assistance began coming in through bitcoin and other cryptocurrencies from individuals worldwide faster than aid from any government. He said, $20 million was raised in less than two days.

In the business of war, Chobanian thinks bitcoin is a serious monetary upgrade. As he told Bloomberg, “It takes 10 minutes for a Bitcoin block to close. And it takes about three days to do the same thing through the banking system, because first we have to receive U.S. dollars in a bank account, that’s at least one day. On the second day, the bank makes sure that they have received the monies on the account and then it takes another day for the SWIFT payment to actually reach whoever the supplier is.”

“So three days vs. 10 minutes,” Chobanian concluded. “Therefore, we prefer crypto. And you can understand that time is money for my country right now. So if we can save a minute, it means that we can save at least someone’s life, so we are trying to speed up the process and crypto is helping us here.”

I can personally attest to this utility, as the Human Rights Foundation (where I serve as chief strategy officer) has run a humanitarian operation on the ground in Ukraine since a few days after the invasion. In one instance, in early April, I recall helping to send money to a contact in Poland to buy satellite phones. It was Friday evening in Eastern Europe and a bank wire wasn’t going to get the job done. So we sent Bitcoin and the phones were purchased and on their way into Ukraine by Sunday morning. To reiterate: This would have been impossible to do with the legacy banking system.

According to a 2020 report, Ukraine was the number one country in the world in terms of per-capita cryptocurrency adoption. It was fourth in the world according to a 2021 industry report released right before the war. In a virtual testimony in front of the U.S. Congress on March 17, Chobanian appeared in a t-shirt which he claimed was one of the only belongings he had left. He was in hiding, like Naumenko, orchestrating help from an undisclosed location. For weeks, he said, Ukrainians had waited days on end for bank transfers. “People are without food, without helmets, without first aid kits, without tourniquets,” he said. “But with cryptocurrency, help comes right away. Time is vital, and crypto is the best alternative.”

“Cash and U.S. dollars in Ukraine are pretty much useless,” he said. “No one wants them … now the most valuable form of money in Ukraine,” he said, “is crypto. Everyone wants crypto because this is the fastest, the most flexible, easiest, and least bureaucratic way to store and spend your money. Crypto is the new king of money in Ukraine.” As the landing page of Kuna says, “In crypto we trust, for Ukraine we pray.”

Bornyakov did not go that far in our conversation, but he did say he thought the growth of Bitcoin and cryptocurrency use in wartime Ukraine are glimmers of a new global future.

“The traditional financial system is convenient for most people because it’s easy to use. But it wasn’t like that 40 years ago,” he said. “A financial system based on cryptocurrency is not ready yet, perhaps for the simple man or regular citizens, but it’s just a matter of time.”

Bornyakov thinks change has been expedited in Ukraine because of certain cultural factors. Citizens are already used to using “shake phones” or apps, where they tap phones together to make payments, instead of cards, he said. Locals are, in other words, ready for financial innovation.

A few decades ago, Bornyakov was a developer who started a product management career. He became CEO of an IT company, then created his own firm in the digital marketing and ad tech space. In 2012, he heard about Bitcoin. He was curious. The exchange rate was only $5 per BTC at the time. His company started to mine on their servers, generating thousands of BTC.

“I realized Bitcoin is a genius system from a technical standpoint,” he said. He also became interested in the wider cryptocurrency world, participating in ICOs in 2017. He told me that in 2016, he had trouble going public with his company, so for him digital currencies “offered a new version of how we can build relationships in the investment world.”

At the time, he was graduating from Columbia University with a master’s of public administration degree. He already knew he wanted to serve his country. “Private sector work,” he said, “just wasn’t bringing me as much joy as before.”

In 2019, Zelenskyy won the elections, and Bornyakov was graduating. “I got a call from an HR agency, looking for someone to fill a position. The new Minister of Digital Transformation Mikhail Federov was looking for a deputy minister.” In the interview, Federov asked Bornyakov to prepare a vision of what he was going to do if he got the job. So he created a presentation. “Cryptocurrency,” he told me, “was included from day one.”

“To grow Ukraine’s GDP,” he said, “we must legalize and use bitcoin and cryptocurrencies, so we passed a law making it possible for companies to get involved.” He said that “millions” of Ukrainians use cryptocurrency. Beyond a robust IT sector, the top reason for this rising trend, he said, is the “complexity of the banking system in Ukraine with regard to international transfers.”

“We didn’t have PayPal or Revolut for a long time,” he said, “so we needed another way.” Bornyakov credits the “inefficiency of the banking system” for Bitcoin’s success in Ukraine.

On the second day of the war, Federov called Bornyakov and told him the situation was worse than expected, that the government needed to buy a lot of things and quickly. “We understood that Russia was preparing an operation,” Bornyakov said, “but not at this scale. We didn’t know they’d try to enter from so many angles.” He also knew the legacy financial system would not be enough.

“I called Chobanian, and he helped create the first version of the fundraising page. We posted addresses and the funds began to flow.” At the time of our interview, the government had raised around $71 million. Today, it’s past $110 million. Bornyakov called this “beyond our expectations.” He said 40% of the funds spent were conducted directly in bitcoin, stablecoins, ethereum or other cryptocurrencies. He estimates that more than 100,000 Ukrainians left the country with cryptocurrency and acknowledges how useful it is as a refugee technology.

In late April, however, the Ukrainian government placed new restrictions on the use of bitcoin inside Ukraine. Citizens were forbidden from exchanging large amounts of hryvnia into bitcoin.

Though issued in direct contradiction to Bitcoin’s ethos, Naumenko told me that he thought this regulation wasn’t hugely significant and explained that he thought it would, worst case, make buying bitcoin a bit more difficult and less convenient. He explained such moves as inevitable in dying fiat currency systems like the hryvnia, as government officials struggle with citizens trying to convert soft money into harder money.

“I hope the Ukrainians suffering from these restrictions will make sure to store their savings in Bitcoin after the war, once Putin is driven out of the country,” he said. “I hope they come to realize how bad statism is, too.”

With regard to Mr. Putin, Bornyakov alleges that the Russian government is using cryptocurrency to avoid sanctions but not in a big way. He sees much more good coming out of the technology than bad.

“How are dictators going to control Bitcoin?” he asked. After a short pause, he answered his own question: “They won’t. They’ll fear it.”

VI. Russians Against The War

Most human rights activists don’t grow up wanting to be human rights activists. It’s something that happens to them, often by accident. This is especially true in the story of Anna Chekhovich.

In the spring of 2017, Chekhovich was 24 years old, working at a shoe company in Russia, doing logistics. She didn’t think too much about politics. She was of course aware, for example, of the Kremlin’s seizure of Crimea in 2014, and even then was personally opposed to it, as were many of her friends. But she didn’t deeply analyze these political events. “When you don’t know anything,” she told me, “it’s hard to begin.”

This all changed that March, when one of her friends invited her to attend a big protest in Moscow. At first, she didn’t know what it was about. She heard there was “some politician named Navalny who released a video about Dmitry Medvedev,” who was serving as the president of Russia.

In 2011, opposition politician Alexei Navalny founded the Anti-Corruption Foundation (FBK, for short) to put a spotlight on corruption in Russia. Since then, he and his team have published hundreds of investigative reports on the corrupt relationship between the Kremlin and the oligarchs. One video, for example, exposes a billion-dollar palace owned by Putin and racked up more than 120 million views. The FBK’s top investigations regularly spark protests across Russia.

In August 2020, Navalny was poisoned with Novichok nerve gas on a flight from Tomsk to Moscow. He fell into a coma after an emergency landing and was eventually evacuated to Berlin. He survived the attack, but later was detained by Russian police and today is serving a nine-year prison sentence in a penal colony for alleged theft of donations to his now-banned organizations.

In a recent public statement on April 19, Navalny lamented the death of a man killed in the Ukrainian village of Bucha, with the surname of Navalny, evidently killed because of the fate of sharing a last name. His message to the Russian people was clear: “Protest wherever and however you can. Agitate however you can and whomever you can. Inaction is the worst possible thing. And now its consequence is death.”

The video Chekhovich saw in 2017 — “Don’t Call Him a Demon” — had been produced by the Navalny team and accused Medvedev of funneling bribes through his friend network. It went viral, even reaching apolitical people like Chekhovich, soaking through society, and igniting protests across the country.

More than 10,000 people are estimated to have gathered at the protest Chekhovich attended in Moscow to rally against regime corruption. She said that it was the biggest protest she had ever seen. In the middle of the crowds, people were chanting slogans: “No to Putin, no to corruption.” It shocked Chekhovich to the core, she told me, to see police and special forces find and extract these chanters from the crowds, and savagely beat them with clubs and abduct them, treating her peaceful countrymen and countrywomen like animals.

“At that moment,” she said, “I realized my life had changed.”

She managed to escape the protest with friends without harm. As soon as she got back to her apartment, she decided to learn everything about Russian politics and corruption. “The very next day,” she said, she decided to quit her job and dedicate her life to challenging Putin’s regime.

Chekhovich was struck by the power of the Medvedev video that the FBK had released and decided that day to send her CV in for a job at the FBK. There was no opening: She just applied, saying that she couldn’t imagine doing anything else after the protest, and that she’d do any kind of work.

Two weeks went by, and her hopes dimmed. As it turns out, the HR representative for the FBK had been arrested at the protest, and their emails had piled up. When the rep got released, Chekhovich got her interview and got the job.

For her first two years at the FBK, Chekhovich lived and worked in Moscow. After doing odds and ends, she ended up leading the financial team and now serves as the organization’s financial director. In 2019, the Russian state began a criminal case against the FBK, accusing Navalny and his team of money laundering and fraud.

Around that time, Chekhovich said, “strangers started to follow me home after work.” They started to hack her social networks and even compromised her mother’s Telegram account. “They were trying to tell me something,” she said: We know where you live.

So Chekhovich left the country. She said this was the goal of the regime, which didn’t want to deal with the messiness around an arrest. Two months after she fled, police came and searched her apartment. Her friends, who had been using her flat, told her all about it. When I asked Chekhovich if she could go back home to Russia, she said — with disbelief in her voice that I even would pose the question — no, of course not. “Not until the regime changes,” she said.

Why were Putin and his cronies so afraid of her, I asked?

For starters, she said, the FBK had launched a nationwide network of regional offices, and each office made independent investigations of local corruption. As a grassroots movement, the FBK has made a “huge difference” in the public perception of the government. As a result, she said, people “found out they have rights and found out they can have a better life.” She also talked me through the success of the Navalny presidential campaign, which began at the end of 2016, and shook the regime to the core.

Over time, she said that the Kremlin realized that “by destroying the FBK’s financial infrastructure, they could destroy the organization.” Chekhovich told me that she made copious notes before our interview because the FBK suffered so many different attacks on its bank accounts over the years that she was afraid she would lose track.

In 2016, the FBK decided to split its work into two entities to decentralize: one legal entity to work in Moscow on corruption investigations and the other to focus on political projects and the presidential campaign. This seemed to work, at least until January 2018.

She can recall vividly the first time that the government froze the FBK’s bank account: “It was a usual working day. I got to my desk, logged in, and checked our account: what I saw there made me fall down off my chair onto the floor. It showed a balance of negative 1 billion rubles.”

She called the bank, but no one would reply. She went to the bank in person, but employees still wouldn’t say anything. Eventually they showed her a freezing order document, which had been issued without any court decision. The Russian state simply decided to liquidate the foundation. Now, the FBK realized, their funds could be frozen anytime. Businesses, Chekhovich said, already were skeptical about working with anyone from Navalny’s team, but without an official bank account, it was off the table.

In 2019, the state froze FBK funds again. This time, -75 million rubles was the new balance. This was, she said, the amount the state accused the FBK of laundering. The government began blocking the bank accounts of various foundations, even those only very loosely connected to the FBK. In Putin’s eyes, all these institutions belonged to Navalny, even though he never worked at them or funded or received money from them. The regime realized, Chekhovich said, that fabricated criminal cases were easy ways to justify frozen bank accounts. Navalny and his family also had their personal accounts frozen, on the back of such accusations, as did many people who worked on the FBK team.

Later in 2019, a foreigner made a donation to the FBK. Chekhovich personally tried to return the money, but it was too late. The Kremlin immediately designated the FBK as a foreign agent. This meant they were under an even tighter magnifying glass. “Any error,” she said, “would be enough to liquidate the funds in the foundation’s account.”

Finally, in 2021, the FSB resorted to what Chekhovich called their “final weapon”: designating the FBK as an extremist organization. The group was forced to stop all official financial activities. It was no longer possible to have any transactions inside the banking system.

Today, the team has foreign accounts and carries no official entity inside Russia. Due to sanctions, it’s not possible for them to use Russian credit cards abroad. “The goal of the regime,” she said, “was to push us out. But they didn’t understand that this would not stop us.”

Chekovich’s colleague Leonid Volkov came up with an idea, as early as 2015, to help overcome financial repression: Use Bitcoin. When she joined, the FBK was already accepting bitcoin donations, mainly from people who didn’t want to wire funds from their personal bank accounts and attract questions from the state.

Bitcoin has played a “very important” role for activists, said Chekhovich, “especially for organizations like our foundation.” She said the technology is not good or bad but neutral: “It’s a tool for everyone.” In that context, she’s glad the FBK started using it seven years ago, before the Russian authorities.

As of late April 2022, the FBK had received 658 BTC in total and smaller amounts of a variety of other cryptocurrencies. On average, these gifts have accounted for around 10–15% of all FBK monthly donations. Recently, Navalny’s team has also launched an “inflation tracker,” to show how the prices of goods have skyrocketed in Russia in recent months. The program is designed to increase public awareness of what’s happening (where the prices of basic food goods have gone up as much as 60% in the past two months) and may also increase awareness of bitcoin’s debasement-proof alternative.

Chekhovich said she “doesn’t understand” how Putin would get around sanctions with bitcoin, despite warnings from Western leaders like Hillary Clinton and Elizabeth Warren. Instead, she thinks Putin is afraid of Bitcoin, just like he is afraid of everything he cannot control. There is a new draft law in Russia, which aims to only permit the use of bitcoin and cryptocurrency through platforms that collect the personal information of users. The FSB has pressured the central bank to slow the spread of cryptocurrency. “They put so much effort into controlling our money flows,” Chekhovich said, “so they can’t let this succeed.”

“Maybe,” she said, “they’ll create a Chivo, and force people to use that,” referring to the Salvadoran state-run Bitcoin app, which requires ID and has raised questions of surveillance and money printing.

“They will never let the public fully use a currency that the state does not control,” she said. “They’ve realized that cryptocurrency is a weapon in the hands of independent media and activists and that it can help ruin the regime,” she added.

Hundreds of thousands of Russians have fled their country since the invasion. Their connections to the international financial system have been largely severed. They’ve escaped to places like Turkey, Armenia and Georgia, where Chechovich is now.

As the journalist Masha Gessen wrote in a profile of this Russian exodus in the New Yorker, these new countries often discriminate against Russians, making setting up new bank accounts difficult: “The Bank of Georgia started requiring potential clients who are Russian citizens,” she wrote, “to sign a statement declaring that Russia is an aggressive occupying power and pledging that they will not spread Russian propaganda. Venyavkin, the Stalin historian, was happy to sign, but the bank rejected his application anyway.”

When Chekhovich asked a friend in Georgia what the best option was for receiving income from inside Russia, the answer came back in one word: cryptocurrency. She realized that many people stay in Russia, despite wanting to leave, because they don’t know how to get their money abroad. Education about Bitcoin could change that. “Knowledge,” she said, “can be power.”

On Kyiv’s cryptocurrency fundraising effort, she said that “Ukraine’s defense is the most important thing in the world, and cryptocurrency plays a key role in that. It can save lives even when all other infrastructure fails.”

Many bitcoin and cryptocurrency donations to the Ukrainian defense fund, she informed me, come from Russians and Belarusians, who are ashamed of their government’s crimes. They want to support Ukrainian victims and have no other way. Referring to Bitcoin’s critics, she said, given its use by the Ukrainian government, Ukrainian people and Russian people: “How can we doubt its importance now?”

Chekhovich left her mother and sister behind in Russia. “I can’t help them, I cannot send money to Russia. I have no Russian bank account. I am considered an extremist.”

“For people like me,” she said, “Bitcoin might be the only way.”

VII. Bretton Woods III

Bitcoin is being used at the micro level by both Russians and Ukrainians. It is also likely to play a major role in the world financial system moving forward at the macro level, as a direct result of Putin’s invasion.

When G7 nations froze nearly $400 billion of Russia’s central bank reserves, the global financial order began to change. This was a wake-up call to the world that “inside money” (like U.S. treasuries, which are an issuer’s liability, as opposed to “outside” asset money like gold or bitcoin) was not good enough.

If a country saves in a financial instrument that someone else can freeze, then they don’t really have savings, as the Afghan government learned in 2021. The willingness of G7 nations to weaponize the dollar and euro marks the beginning of a great transition away from a world where U.S. treasuries operate as the world’s paramount and dominant savings asset, financial collateral and numeraire for energy. Moving forward, governments will diversify away from a dependency on American debt.

Credit Suisse analyst and money market expert Zoltan Pozsar has called this new era Bretton Woods III, contrasting it to Bretton Woods I and II. The first era was between 1944 and 1971, when the world saved in U.S. dollars, backed by gold at a redeemable rate of $35 per ounce. The second era was 1971 to 2022, when the world saved when it could in U.S. treasuries, with unquenchable demand for American financial instruments spurred on by the petrodollar and eurodollar systems. The third era, according to Pozsar, will be marked by governments moving away from a reliance on the dollar from both a stock and a flow perspective.

From a “stock” perspective, foreign central banks will diversify their reserves. This is part of an existing trend: Over the past eight years, foreign central banks have bought three times as much gold as U.S. treasuries (USTs). Now, foreign demand for USTs will continue to weaken, forcing the U.S. government to continue to step in and act as the buyer of last resort. As an example, Israel, one of America’s top allies, sold off some of its dollar reserves a few weeks ago in exchange for Chinese debt. Likely not because the Israeli government is seeking an alliance with China but simply out of financial prudence. Pozsar thinks major powers will diversify into gold, non-G7 currencies, commodities (like wheat and oil) and — if it survives, he said — maybe bitcoin.

From a “flow” perspective, Pozsar says energy markets will start to be priced in other currencies. China and India have both discussed pricing energy sales in yuan and rupees, and Russia’s demands that its energy be bought in rubles, while not entirely effective, are significant. As Pozsar argues, once the transaction itself is priced in another currency, then the related contracts, insurance and derivatives start to be priced in other currencies, too. This will weaken the dollar’s global network effect.

The decline of dollar hegemony, and higher rates on U.S. debt, will likely lead to a decade of higher interest rates and higher price inflation. Over the next decade, dollar instruments will lose significant purchasing power (inflation is at 8.5% already in the United States) and scarce commodities like oil, meat and especially bitcoin stand to get more expensive in dollar terms.

As BitMEX founder Arthur Hayes recently wrote, a reduction of foreign demand for U.S. debt will almost certainly lead to yield curve control (YCC), which was last employed by the U.S. government during World War II. YCC is when the central bank suppresses the interest rate on treasuries below a certain level by simply buying whatever it takes to keep perceived demand afloat. The result is financial repression: inflation much higher than interest rates, which we are already seeing in the U.S. and EU, and which destroys the value of cash and savings.

The EU, as Hayes points out, will be forced to employ YCC for energy reasons as well. For the past decade, Europeans have enjoyed cheap Russian gas. That will no longer be the case, which makes government bond market manipulation without consumer price inflation much more difficult. In his latest essay on April 29, Pozsar argued that Russian forces — having already captured Mariupol and threatening to take Odessa — may seize control of half the world’s production of neon, a key ingredient for semiconductors. He used this example to prove a point about supply shortages of key materials and technology, which will drive prices up and force central banks to continue easy monetary policy.

In the 1940s, as a result of FDR’s Executive Order 6102, gold was illegal for Americans to own, so they couldn’t easily save into a better money. But today, bitcoin is owned by tens of millions of Americans — one in five American adults, or 50 million people have owned or used cryptocurrencies according to a recent CNBC poll — and is widely available on popular phone apps like Cash App. If financial repression continues to persist, value will continue to flow in bitcoin’s direction. This will become especially pronounced in emerging markets and authoritarian regimes, whose currencies are much weaker and less trusted by international bond markets than the dollar.

From a moral perspective, perhaps it was worth it for America and the G7 to sacrifice the dollar to end the war. What the Russian army is perpetrating in Ukraine at the moment are the worst abuses seen on the European continent since the genocide in the Balkans, if not since the atrocities of Stalin and Hitler. Whatever it takes to end the killing is likely worth it. But weaponizing the dollar comes at an unavoidable cost: The U.S. gradually loses this power as other nations choose to work in other systems.

So as Ukrainian technologists, Crimean educators and Russian activists increasingly flock to Bitcoin, they may be early and major beneficiaries of a great global shift at the expense of the powers that be. At the end of the day, the spread of Bitcoin worldwide puts power back in the hands of individuals and takes it away from governments and corporations.

This realization is what keeps Gleb Naumenko focused on Bitcoin, even as the world is falling apart around him.

VIII. When Everything Else Stopped Working, Bitcoin Was There For Us

“I was very lucky to have Bitcoin,” said Naumenko, recalling the first few minutes and hours after he learned about the Russian attack and went into hiding.

“I didn’t have to worry about carrying cash or dealing with hryvnia. I have a couple thousand dollars worth of local fiat, and everything else is in Bitcoin,” he said. “I didn’t have to lose sleep over getting locked out of my bank account, or my currency collapsing to zero, or a new country not accepting my money.”

He pointed out that since 2014, the hryvnia has lost 300% of its value against the dollar. Before the annexation of Crimea, one had to exchange 8 hryvnia to get a dollar. Today, you need 30. The government sells gold to try and keep the currency afloat, but he doesn’t think that is sustainable.

Naumenko gave some advice for Bitcoin users around the world who might be reading this article: What if you wake up tomorrow and suddenly have to leave your house? Prepare accordingly, even if the scenario seems far-fetched. “My set-up for Bitcoin was not quite ready for war. I was always thinking about a hacker or someone breaking into my house,” he said, “not someone breaking into my country.”

His advice: store more multisignature keys abroad. “If you have two of your three multisig keys in two different apartments, but they both get destroyed by rockets,” he pointed out, “then you’re going to lose all your bitcoin.”

Luckily, this time, Naumenko managed and was able to bring his savings with him when he fled his home and when his bank accounts grinded to a halt. Today in Ukraine, he said, it’s very easy even in the middle of a war zone to buy and sell bitcoin into hryvnia. “It takes 10 minutes.”

He showed me a Telegram bot called Alice-Bob, a front end for a peer-to-peer marketplace. To sign up, you can just use a burner email. There is no KYC process, and it makes exchanging bitcoin or Tether for hryvnia simple. Then there are the plentiful P2P markets. “Five times a day,” he said, “I see a message in one of my group chats saying: can someone give me $5,000 in cash for Tether in Kyiv?”

Over the last few months, Naumenko has embarked on more humanitarian work than he thought he’d ever do in his entire life. “This is my problem,” he said. “I am always very positive. I estimate that an ambitious goal will be easy and quick. That way, I do it. If I told myself a Bitcoin project would take three whole years to complete, then I’d really have to persuade myself to commit, and may not proceed. Sometimes I have to trick myself.”

In this case, Naumenko’s optimism has been fruitful, and he’s gotten more done then he thought possible. “We raised about 4 BTC through my Twitter account and a Bitcoin Magazine article. I cannot imagine collecting that through bank transfers, which were hard before the invasion, and probably even more difficult now.”

Naumenko said he was able to spend about 20% of that directly in Bitcoin, without converting to fiat. Initially, in the first few days of the war, when foreign aid had not yet arrived, he and his team bought cars in Poland with bitcoin for volunteers to drive goods to Kyiv. In those days, he said, there was a lack of food and very basic medical supplies. It’s getting better now, he said, and Western aid organizations have adapted, but when times were darkest, Bitcoin made aid possible. “When everything else stopped working,” he said, “Bitcoin was there for us.”

Naumenko recently helped CNBC send a bitcoin donation from Miami to a Ukrainian refugee in Poland in less than three minutes. The process was captured on video and shared with the world to show the power of peer-to-peer aid.

Naumenko thinks this kind of innovative humanitarian work will be a part of his life for a long time. “Even if we de-occupy, the destruction will take time to heal.” In his hometown of Kharkiv, he’s been using bitcoin donations to finance thousands of meals through an Asian fast-food shop, catering to older people who weren’t able to escape.

One of his friend’s brothers was drafted as a medic, but he had no equipment. “So we bought a laboratory for him filled with $20,000 of medical supplies,” he said, “so he can perform surgery on people injured by war.”

Before the invasion, Naumenko was involved in a bunch of Bitcoin and startup meetups in Kyiv. Each one had a Telegram group, and he’s marveled at how nearly everyone in these groups has become an aid worker. “No one is getting paid for it,” he said, “they just do it.” He said the Red Cross is inefficient and corrupt (they are “handshaking with Lavrov,” as he puts it), so it’s better, he says, to support local initiatives.

“Personally, I was lucky to have some savings and a remote job. Getting paid in bitcoin is fine with me,” he said. “I might be a little uncomfortable staying in someone else’s apartment, but that’s my biggest complaint. For most Ukrainians, they have much, much bigger problems.”

“Look at my parents,” he said. “They lost their jobs. They had conventional careers in Kharkiv. Now they are displaced in western Ukraine in a village, with no income. This is now the case for millions of people.”

“I was very involved with Bitcoin before the invasion,” Naumenko said. “But now, I have to make some room in my heart for strangers and neighbors around me.”

It probably means he’ll spend a bit less time on Bitcoin, but he’s committed to finding ways to keep doing both. “I’ll find a way to combine the two,” he said. “I can help rebuild Ukraine and still contribute to open money for the world.”

This is a guest post by Alex Gladstein. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.