War3 II

Casimir Stone
March 3, 2022

On Tuesday, we discussed the stalemate playing out between the U.S., Russia, and Ukraine in a proxy war fought over web3. TL;DR:

  1. Russia could theoretically use crypto to replace the ravaged ruble,
  2. The U.S. could leverage these concerns into prohibitive regulations, and
  3. Ukraine’s reliance on crypto donations raises red flags regarding the blockchain’s role in conflicts moving forward.

Now, in a mere 48 hours, the grueling content gears have ground our posititions into pulp, forcing us to respond again. The Polisci major in me knows war is just an information problem. So here we go:  

1.) Jake Chervinsky, Head of Policy at the Blockchain Association, tweeted an exhaustive (/ing) thread arguing that Putin ‘can’t and won’t’ use crypto to evade sanctions. By Twitter discourse standards, he makes some compelling points. Most of the sanctions we’ve put into place just mean that, for a collection of SDNs (‘Specially Designated Nationals’ including Putin, his government, and oligarch friends), it is now illegal to exchange money with U.S. parties (companies, citizens abroad, individuals living here). Whether that money is in ‘dollars, gold, sea shells, or Bitcoin’, the U.S. parties would face legal penalties for breaking the sanctions.

So, Chervinsky says, ‘there’s zero reason to think’ U.S. parties would be more comfortable transacting via an anonymous currency designed to purchase drugs off the Internet without repercussions than via a wire transfer from the Bank of America to Vladimir Putin. Which, yeah, totally checks out to me. He goes on to tout on-chain transparency and U.S. analytics capabilities as reasons Russia can’t use crypto anonymously, and points out that Putin’s years-long push to sanctions-proof Russia revolved around yuan and gold, not crypto. 

Makes sense, except extensive research reveals use cases in almost a dozen countries, Russia included, of crypto-enabled sanction dodging. And, hours ago, Chervinsky shared the Treasury Department’s warning that Russia’s cyber-attacks may soon extend to crypto wallet heists, suggesting his followers liquidate their digital assets ASAP. Of course, his concern seems to be less about the Kremlin’s now-intelligence-supported interest in crypto and more about ‘what Congress or regulators might do in a tense situation like this’, which leads us to…

2.) Earlier today, MetaMask and Infura, both major user bridges to the Ethereum blockchain, went down in Venezuela due to ‘legal compliance issues’. Service was restored hours later, but not before stoking the obligatory Internet outrage. Larry Cermak, VP of Research at The Block, tweeted: ‘If Metamask/Infura is open and willing to block countries like Venezuela by IP addresses, it’s only a matter of time until they are forced by regulators to censor individual people’s IP addresses.’

We’ve already seen the beginnings of this in the Russo-Ukrainian War, with Coinbase and Binance agreeing to block accounts of sanctioned SDNs, but stopping short of the blanket ban on all Russian accounts called for by Ukraine. The U.S. government has also gotten better at recovering stolen cryptocurrency, although their tactics for doing so are, as of yet, unclear.

I personally am in support of corporations adhering to government demands to stimy war crimes. But for the libertarian-est degens, it’s a healthy reminder that, as long as access to web3 resources is facilitated by companies with the organizational playbooks of web2 — centralized, private corporations acting as gatekeepers — the government will have a significant say over who has access to the technology. So, either figure out a way to use the blockchain on your own terms, or hit up your local library and borrow a copy of The Golden Notebook. Adapt or accept.

3.) Ukraine has now received ~$48M in crypto donations since the start of the war a week ago — as much as the ConstitutionDAO raised in the same time period. (I’m now realizing that’s kind of a depressing comparison, but this is the Internet, after all.) However, while lucrative, their crowdfunding efforts have also been messy, as predicted. 

Scammers are already appropriating the conflict for their own gain, posing as official channels calling for donations. And while the real channels are raking in real cash, they’re also being filled with shit like this:

The editor-in-chief over at Decrypt echoed our sentiment that, even while it’s clearly called for in this specific situation, crypto’s newfound influence in world conflicts is not necessarily a net positive. The Canadian trucker protests, for instance, were sustained almost entirely by Bitcoin, and, while the protestors were celebrated on web3 Twitter, citizens of the country reportedly had a different response to foreign money funding a radical minority blocking their borders. 

Anyway, the point of this State of the Decentralized Autonomous Union Address has mainly been to say: Prediction is the lowest form of journalism. And it should now be quite obvious no one can read Putin’s mind, or our President’s, or the general tenor of humanity. So, rather than weave together intricate arguments about why our visions of the future are the most valid, maybe it’s time to educate ourselves and prepare for whatever version comes to pass. 

Here are tangible ways to support Ukraine. Please do not send Shiba NFTs.

No Account Yet? Sign Up Here