October 25, 2020

Gen Z Conservative

The thoughts of a young conservative on political issues relevant to all ages

cryptocurrencies and hybrid wars

Cryptocurrencies and Hybrid Wars

The Article:

This morning I read an interesting article on RealClearDefense about how Russia has potentially used cryptocurrencies to finance its hybrid wars around the world. The article, written by Maksym Bugriy, is called  “The Role of Cryptocurrencies in Financing Russia’s Hybrid Wars.”

Summary:

In the article, Bugriy does an excellent job of explaining how Russia as an entity and individuals within Russia, have used cryptocurrencies to fund “hybrid conflicts” around the world.

Bugriy begins by describing how Russia used cryptocurrencies in Ukraine. It supposedly used them to finance activities during the election, and also used them to prop up leaders in the Donetsk and Luhansk People’s Republics. Those leaders needed money, and cryptocurrencies were a good way to get them money. Cash would have been too difficult or too obvious. The FSB supposedly coordinated those payments.

Next, Bugriy describes how a Russian bought a cryptocurrency exchange and then let the FSB use it. Russian government groups used it for money laundering and cyber-crime. Additionally, the FSB used the exchange to make the payments to Luhansk and Donetsk described above. The exchange had a number of shady uses for the Russians, and Bugriy states that the Russian government financed the purchase of it. He knows this because Ukrainian intelligence officers have been monitoring the cryptocurrency exchanges.

The second half of the article describes how Russia has restricted cryptocurrency use at home. Although it has used those currencies to support its activities abroad, it doesn’t trust them enough to be used within its borders. Despite government interference, Russian businesses are fond of cryptocurrencies. They have pushed to be able to continue to use them. It remains to be seen which side will prevail.

Analysis:

I thought this article was very interesting and extremely helpful as a way to understand the new technologies used in hybrid warfare. Like most articles about a highly technical and secretive topic, it was a bit dense. I had to read over it a few times to really understand what was going on. The multitude of Slavic names, cryptocurrency exchanges, and “he-said, she-said” reports made it a bit hard to follow. However, it was interesting.

I particularly liked how Bugriy described the difference between Russian activity with cryptocurrencies abroad and its refusal to use them at home. That paradox was interesting because it shows the realist nature of Vladimir Putin. Instead of focusing on an ideal, he focuses on what it best for Russia. Utility trumps values for Putin.

Cryptocurrencies could hurt Russia if other countries use them the same way that he is. Because of that, he has restricted their domestic use. Although that could hurt innovation among Russian businesses, I think it is ultimately a smart move.

It will limit Russia’s vulnerability to cyber attacks through ensuring that it’s businesses aren’t overly reliant on computers, and it will limit Russia’s vulnerability to hybrid warfare backed by cryptocurrencies. If there is no infrastructure in place to make use of those currencies, foreign governments will have a harder time using them to combat Russia.

Finally, I think this article is one that every Western leader and cryptocurrency advocate should read. Yes, they have many characteristics that make them innovative and exciting. Yet they also have many pitfalls and dangers. Especially in the realm of geopolitics. Those dangers should be recognized and contained before cryptocurrencies are widely adopted. Otherwise Russians or others could use them against us.

By: Gen Z Conservative

Links:

Read the article here:  https://www.realcleardefense.com/articles/2019/04/22/role_of_cryptocurrencies_in_financing_russias_hybrid_wars_114352.html

Check out others like it here: https://www.realcleardefense.com/

Read a book about war with Russia here: https://genzconservative.com/the-red-line/

Read another article of mine about cryptocurrencies:  https://genzconservative.com/the-gold-standard/

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