today is Oct 05, 2022

step by step online business

When Russia invaded Ukraine, Niki Proshin was already a year into making a living as a vlogger — he had a YouTube channel, a TikTok channel, and an Instagram. He also ran an online Russian club for anyone who wanted to learn the language. His website, like his videos, is in English.

Instagram no longer functions in Russia. Google has stopped selling ads in Russia. It is no longer possible to subscribe to his Russian club via PayPal, which has suspended its services in Russia. Patreon, his other payment option for the Russian club, “kind of works,” but because many Russian banks have been kicked out of SWIFT, he can’t withdraw his money.

“It is quite painful,” Proshin tells The Verge. “It affects me personally a lot. It’s 95 percent of my income.”

It took a whole morning to set up his wallets for cryptocurrency donations. Since then, Proshin has gotten 10 donations in Bitcoin and less than that in Ethereum. But that only brings him to another problem: it’s hard to convert what he receives into rubles. “In Russia, we have fewer opportunities to withdraw it as cash,” Proshin says. “I don’t understand how I can buy something physically in Russia.”

So far, Proshin’s only been able to make one purchase: a VPN, which is essential for accessing the broader web from Russia. Foreign-based VPNs don’t accept Russian bank cards, Proshin noted. They do, however, take Bitcoin.

Proshin isn’t the only English-speaking Russian creator who’s suddenly put up a wallet address. “With everything going on in the world, you can officially call me hairy and bankrupt,” says Roman Abalin in a video posted March 2nd on his YouTube channel called NFKRZ (pronounced “no fuckers”). In the video’s description, there’s an address for his Bitcoin wallet.

For the last 10 years or so, I’ve heard speculation about how useful a non-state currency might be. Historically, gold has sometimes been a stable source of value for people making a quick exit from a country. crypto proponents suggest that digital currencies can accomplish something similar.

Russia and Ukraine are both countries where cryptocurrency adoption is relatively widespread. (Russia is the third-largest miner of Bitcoin.) The Russian invasion of Ukraine, and the international response to it, is a real-world test of cryptocurrency’s value to ordinary people. Ukrainians have been fundraising in crypto, and almost $100 million had been donated as of March 9th.

There’s been some concern from lawmakers that sanctioned Russian oligarchs might use cryptocurrency to move their money. On March 7th, FinCEN Acting Director Him Das said the agency had not seen “widespread evasion of our sanctions using methods such as cryptocurrency.” FinCEN nonetheless warned financial institutions, especially those that deal with crypto, to be vigilant about unusual transactions.

Russian oligarchs have been on notice since the 2014 invasion of Ukraine by Russia — they’ve had time to start moving their money, says Salman Banaei, head of public policy at Chainalysis. They’ve also had lots of options: shell companies, real estate, yachts, Deutsche Bank, and so on. The circumstances where an oligarch might want to use cryptocurrency are limited since it’s hard to hide a big demand for liquidity, Banaei points out. Why go to all that trouble when you can just use the yuan?

Meanwhile, the Russian government has essentially put sanctions on its ordinary people by limiting how much currency they are allowed to withdraw in foreign denominations, says Banaei. Ordinary Russians who are using cryptocurrency aren’t bypassing American or European sanctions — they’re bypassing Russian restrictions.

And trading volume suggests that Russians are moving into crypto, says Tom Robinson, the chief scientific officer at Elliptic. “This is most likely average Russians (rather than sanctioned oligarchs), moving into crypto in order to evade capital controls and flee the rapidly-devaluing ruble,” Robinson said in an email.

The Russian ruble has fallen 17 percent against the US dollar from its close on February 23rd to its close on March 16th. The Russian economy is turbulent. Proshin’s day-in-the-life videos have changed. The most recent one features Proshin in a Russian supermarket, where he’d shot a day-in-the-life video four months ago. In both videos, Proshin brought 5,000 rubles with him to shop with. Among Proshin’s findings: the price of fish went up 60 percent in just four months, and even vodka is more expensive.

A lot of English-language Russian YouTubers have similarly changed their focus, though not all. (Some language-learning channels contain only language lessons and no political commentary.) On the channel Natasha from Russia, Natasha is also chronicling how ordinary Russians are experiencing sanctions. Life of Boris, a YouTube channel with 3.4 million subscribers, put up a video entitled “All is Lost” in February and has posted nothing since (“I have nothing to say besides that I am ashamed,” Boris says in the video). Proshin and Abalin are outliers: the majority of these channels have not posted cryptocurrency wallets to try to make up for lost income.

Victoria Terekhina left Russia with her family and has posted a Patreon link; since she’s now in Uzbekistan, she is no longer cut off from the global financial system. NFKRZ’s Abalin has also since left Russia, though he’s not sure how long he’ll stay away.

For Banaei at Chainalysis, the troubles that Russians are encountering now have a familiar ring to them — his own family left Iran after the Iranian revolution. “You’re just looking for whatever way you can to hold on to as much wealth to take with you to your new country, or even just to stay within your own economy,” he says. Faced with dwindling choices, some ordinary Russians are trying out cryptocurrency as a solution. And the public blockchain means we can actually see if adoption takes off.