For the last two weeks, I’ve been addicted to media coverage of world events, specifically as it pertains to a people’s freedom and a country’s sovereignty. Of course, I’m talking about the ongoing Ukraine-Russia conflict. Shoring up NATO and the EU’s retaliatory stance, a number of world banking institutions began disabling access by anyone involved with, or contributing to the unprovoked invasion of Ukraine.
What is playing out in Russia as the global banking system becomes a weapon aimed at crippling Russia and its people to put pressure on Putin is truly fascinating, and unintentionally highlights and spurs the adoption of digital currency.
Case in point, this weekend I made a direct transfer of some Bitcoin to a Ukraine government controlled wallet to help the cause. I did this knowing that it was the most direct, expedient, and secure method of supporting Ukraine once the wallet address was confirmed to be in the control of the Ukrainian government.
I was reminded of my favorite story from an entrepreneur I had the pleasure of working with a few years ago. This person we’ll call Abel for brevity's sake grew up in a comfortable, upper middle class life in Zanzibar, indulging his passion for sailing from a very early age. Then things changed rather quickly in Zanzibar with the revolution of 1964. At the time, his family kept a sizable portion of their wealth in gold. While still a teenager, Abel sneaked his family's gold bullion out by hiding it in the gas tank of his sailboat. Had he been caught, it could have meant death, but certainly the confiscation of his family's wealth.
Fortunately there’s a happy ending to this story. Abel successfully transported himself, his family, and their financial assets out of the country, eventually making their way to the U.S. Here, Abel founded and led companies that reaped tens of millions of dollars in the 1970’s and early 1980’s. Today, Abel still indulges his passion for sailing more than ever.
On Wednesday when the war in Ukraine broke out, I was watching the long lines at ATMs in Kyiv.
I had to wonder how many potential Abel’s there were who would lose their financial assets because they were waiting to get at least a portion of their money out of the bank. Which drives home for me that this is not a time to waste waiting for the bank to clear your transaction or an ATM to spit out cash, likely at risk of it being stolen or confiscated in these perilous times.
What this series of events highlights is the weakness of the legacy banking system in emergency situations when people have an urgent need for access to their money and financial assets should things change rapidly–be it a politically motivated act of war or some natural disaster that forces them to physically and, possibly permanently, evacuate.
In my nice, safe bubble of San Francisco where my wife and I live, our biggest emergency threat at the moment that would require a go bag are earthquakes or fires. Having true custodial ownership of Bitcoin is much more practical when it comes to having to travel fast and on short notice. (Even though we live in an upscale zip code, theft is a real possibility, and unfortunately in cases of true emergencies, the likelihood of theft from desperate people is increased.)
For the record, having grown up in California, I’m much less worried about an earthquake than my wife (unless I happen to be in an elevator). Fires are the bigger concern now and I was actually in a very scary situation in 2019 that required a go bag.
This week as I continued to watch the events in Ukraine unfold, I came to realize that I was already prepared for a go bag type of emergency. We could easily leave on a moment's notice and sell small amounts of Bitcoin in order to finance our journey, while protected from raiders (whoever they be) from accessing our Bitcoin.
In case of an existential threat to my life and liberty such as what’s happening in Ukraine or as the victim of my government’s (for example Russia) sudden willingness to sacrifice the financial sovereignty of its people, self custody of BTC with seed phrases and two or more signatures would be my best bet. Even if taken prisoner, the perpetrators would have a hard time accessing my Bitcoin wealth unless given seed phrases, or in the case of a two or more signature Bitcoin wallet, they somehow get a second key from the trusted custodian or custodians (highly unlikely or if not impossible).
In the above scenario, I’d have 100% confidence that a decentralized Bitcoin network would protect my Bitcoin wealth while we are on the run. Even if the Russians took out every Bitcoin miner and node in Europe and North America, the Bitcoin network would remain secure and protect my Bitcoin asset wealth until I am ready to access it again. Try that with gold, cash or legacy banking.
Up until last week I never even imagined such a scenario and I am still reasonably confident that I personally will never be in a position to need such extreme measures. It was my wife who made sure we had earthquake and fire go bags which I am happy we have, but I never thought I’d need those either until California fires in 2019.
The world events of the last two weeks lay bare the weakness of existing legacy financial systems for all to see, even as we fervently hope that sanctions freezing the assets of Putin, Russian oligarchs, and other bad actors are successful. I believe many more nationstates, corporations, and individuals will be working on a plan B as in Bitcoin as insurance against what only a few weeks ago was an unimaginable event.
I do believe that I will be doing many more transactions using the Bitcoin network directly in the very near future. As evidenced over this past weekend. Refugees on the run doing peer to peer transactions without an intermediary will surely spark more widespread adoption and transactions be it local or cross borders.
All the best
Jim Fox