If the phrase, “to the moon” makes you think about Shiba Inus or Elon Musk rather than outer space, you probably remember the Dogecoin boom of 2021. In January of 2021, the meme cryptocurrency finally surpassed one cent in value, after over seven years of existence. Just a few months later, the price of Dogecoin soared; peaking in May of 2021 at 74 cents. Though the price of Doge has dropped along with the rest of the crypto market, it’s become a common investment. How much is Dogecoin worth now? A few weeks into Russia’s invasion of Ukraine, more than the Russian Ruble.
Why this matters
Because cryptocurrency is decentralized, Russia could potentially use it to skirt sanctions trade sanctions. The Russian economy is in shambles at the moment. And Putin is scrambling to find allies anywhere he can. But now, banks across the globe won’t do business with the country. However, Russia could use cryptocurrency to do business instead of fiat currency. This is problematic for many reasons. But most importantly, the sanctions placed on Russia to pressure them into ending their assault are pointless.
But will that happen?
Luckily, according to Eswar Prasad, a professor at the Dyson School of Applied Economics, probably not. In an interview with CNN, Prasad said, “the Russian government cannot count on bitcoin to evade sanctions.” This is because crypto doesn’t provide the economic stability of fiat currency. Prasat goes further to say that adoption of cryptocurrencies could actually hurt the Russian government. The Ruble is worth about three-fourths of a cent, whereas a single Dogecoin is worth eleven. “Bitcoin might end up precipitating a flight of deposits from Russia’s banking system and even as a conduit for capital flight out of the country,” said Prasad.
The United States Government is already drafting new bills to prevent any attempts from using cryptocurrency to skirt economic sanctions.