Bitcoin in war
What is P2P cryptocurrency trading and money movement during war- a unique opportunity to observe how governments, exchanges, and P2P traders behave in such high-pressure situations.
Since the start of the war, the Ukrainian government has been trying to restrict the movement of money in various ways, which is understandable on one hand, as a large outflow of money from the state would cause its bankruptcy, which would in turn have catastrophic consequences for millions of Ukrainians. On the other hand, I believe that no one should have power over your money, because money is the key to freedom. When you allow someone to have power over your money, you lose freedom. That is why this article was created, where I try to capture the events in a state that has found itself in a critical situation. I believe that most states or institutions would respond similarly to Ukraine, although of course, each case is specific. I believe that the article will give readers, who find themselves in a similar situation, at least a basic overview of how to protect their money.
The War of the First 12 Hours
When the war broke out in Ukraine, within a few hours, banks disabled cash withdrawals at branches and people began to withdraw money from ATMs, which resulted in a problem finding an ATM that still had money within 5 hours. There were several hours-long lines formed at ATMs and even if you stood in line, there was no guarantee that if it was your turn, there would still be cash left in the ATM for you. It's important to realize that you were in a place where bombs were falling, a 60 km column of soldiers and heavy equipment was rushing towards you, chaos erupted, and you didn't know if the place where you were located would be safe in 3 hours or 3 days, so standing somewhere at an ATM and waiting was highly risky. Card payments were limited, and in some places, even completely non-functional. I was unable to find out the reason, but by the end of the day, the situation with payment terminals calmed down and worked, but most merchants still only accepted cash. We are talking about the first 12 hours of the war, when nothing was clear yet and no one really knew what was going on. Bank cards and banks meant uncertainty, cash was needed. Together with friends, we formed a column of cars, and the problem arose when paying for gasoline because most of us had money in the bank and we couldn't withdraw enough of it. The only option was BTC and P2P traders who were able to provide me with cash and as it turned out later, this was key. If we were not able to obtain enough cash to safely leave the city, plan B was left - the Slovak embassy, which, as it turned out, remained stuck in Kyiv for more than a week. This example clearly shows the strength and importance of P2P trading and why governments or anyone else should not have control over your money. If you find yourself in a difficult situation, the only one who can help you is yourself, and I think that in truly difficult situations, this applies twice as much because it is natural for everyone to prioritize themselves.
Restrictions and Limits
The Ukrainian government has implemented a set of measures aimed at stabilizing the economy and avoiding bankruptcy or hyperinflation. My personal opinion is that they are surprisingly successful, although the hryvnia has a real value against the dollar that is 10% to 20% higher than what banks are offering on the street. The Ukrainian government is trying to minimize the amount of money leaving the country, so it has set limits on foreign currency withdrawals, which we will describe below.
From an account held in local currency HRV, it is possible to withdraw up to 300 Euros from a foreign ATM each week. Credit card payments are also restricted, although each bank has slightly different limits. The overall limit cannot exceed 3,000 Euros per person per month, this limit applies not only to banks, but also to services that offer international money transfers, remittances such as WU, money gram and so on. Exchanging HRIVNY for other currencies such as dollars or euros is also restricted or even prohibited, we were unable to find precise and clear information. For example, in Slovakia, until the summer, it was possible to exchange HRV in Tatra Bank, but only 250 euros per person per week, this option is no longer available to Ukrainians and they cannot exchange HRV in SK. Taking into account all the limits and restrictions, the Ukrainian refugee, who is mostly women with children, is indeed restricted, even if they have cash, it is very difficult to exchange it abroad. If they want to exchange HRV in Ukraine, there are also limits that are insufficient and expensive. In the end, he only has a bank account, which is also restricted and can only be held in HRV, which faces high inflation of 26.6%, but in reality it is higher. This is especially seen in the price of food, for comparison, in September 2022 inflation in SK was 14.2%. In practice, this means that a family that is fleeing from the war is losing a significant portion of their means of survival due to inflation, unfavorable exchange rates and fees.
The National Bank of Ukraine has banned P2P transfers from Ukrainian bank credit cards to foreign financial institution cards from October 5, 2022. The press service of the NBU informed about it.
Bitcoin in War
In Kiev, Bitcoin was mostly purchased through P2P methods. Kiev had a very well-developed system of customer recommendations and verification, and I dare to say that it was one of the best based on my experience. When war broke out, P2P traders temporarily suspended the purchase of BTC against HRV, but the sale of BTC against HRV was functional. The main reason was that P2P traders did not want to hold HRV because they were afraid that the exchange rate would go down sharply and HRV would lose value. The Ukrainian government strictly enforces restrictions on the movement of money. The latest information I received from my friend who works as a P2P trader in Kiev was that his office and all customers were monitored. The surveillance culminated at the end of September when he and his employees were arrested, and he lost a considerable amount of cash. He was accused of financing terrorism, which of course is not true and it is clear that the money seized from him will not be returned. This is just one example, and there are several similar situations happening. P2P traders either ended up or only sold to their regular customers. The entire situation has a big impact on the development of trade, the fee was usually 1% to 2% in Kiev with P2P traders, and sometimes even free. If a P2P trader had a lot of BTC and little cash, he would sell with a 0% fee. If he had a lot of cash, he would buy BTC with a 0% fee. Recently, I wanted to facilitate the purchase of BTC for my customer in Kiev, I told him that the fee was 2% as standard, and I wrote to my P2P trader friend to help me process the transaction, but none of them was interested because the current fee in Kiev is 12% to 15%. This is how fees have risen so dramatically in Kiev, where there was no problem buying BTC for 1% before the war. The main reason is that entrepreneurs who need to protect their assets from war and inflation use BTC for international transfers. It is the only safe way to send money from UA and protect their assets.
Cryptocurrencies are a great tool for preserving our freedom, but as we can see from this example, without proper storage and purchasing methods, cryptocurrencies lose their most important features, such as anonymity and immunity from confiscation. I understand that it is more convenient and easier to purchase cryptocurrencies on Binance than on the BISQ exchange, people always look for the easiest way and most people are indifferent to anonymity. I believe that it is possible to create exchanges and applications that are just as easy as Binance, yet as secure as the BISQ exchange, and this is one of our goals at Acechange.io