How Crypto Helps (or Hurts) in Times of Crisis
When digital assets become lifelines or traps.
When crisis hits, be it war, natural disasters, or economic collapses, traditional financial systems often bend under pressure. Crypto, though still relatively new, has stepped into the spotlight during such times. But has it always been a hero? Not really.
Let's dive into some real-life examples and see why the context matters more than ideology.
When Crypto Helps
Ukraine War: Crypto as a Lifeline
When Russia invaded Ukraine in 2022, the global financial system was thrown into turmoil. Banks were inaccessible, currency became unstable, and millions needed immediate financial support. Crypto stepped in quickly and effectively. Ukraine raised over $100 million through crypto donations alone, providing rapid assistance directly to those in need. Unlike traditional systems, crypto transfers were instantaneous, transparent, and immune to geopolitical blockades. It was an undeniably powerful example of crypto as a lifeline.
However, the same technology can also fund aggression. Reports emerged that some Russian entities used cryptocurrencies to evade international sanctions. Though minor compared to traditional finance, it highlighted the dual-use nature of crypto technology.
Argentina: Escaping 100% Inflation
Argentina has battled hyperinflation for decades. In 2023, inflation hit over 140%. The local currency, the peso, kept losing value. Banks imposed limits on foreign currency purchases, and people struggled to protect their savings. Many turned to stablecoins like USDT (Tether) and USDC as a digital dollar alternative.
Instead of holding pesos that lost value every month, people used peer-to-peer apps and crypto exchanges to buy stablecoins. Some used Bitcoin or Ethereum as long-term hedges, but stablecoins became the go-to tool for daily protection against inflation.
Lebanon’s Banking Crisis: An Alternative Financial Escape
Lebanon has been battling a severe banking crisis since 2019. Banks froze people's life savings, leaving many without access to their own money. Crypto offered an escape route. Lebanese turned to stablecoins and Bitcoin as a reliable means to store value and perform transactions when banks wouldn't let them.
Crypto became an essential tool for financial survival, yet accessibility remained an issue. Only those technologically savvy enough and with the resources to acquire crypto could benefit, highlighting the technology's limitations in widespread crisis response.
When Crypto Makes It Worse
FTX Collapse: Trust Shattered
Crises aren't only wars or natural disasters. Sometimes, they're financial meltdowns from within the crypto world itself. The collapse of the crypto exchange FTX in late 2022 illustrated how quickly fortunes and trust can vanish. Investors who thought their assets were secure saw billions disappear overnight due to mismanagement and fraud.
This disaster underscored the harsh truth: the crypto world, largely unregulated, can be incredibly risky. While crypto offers freedom from centralized control, that same freedom can lead to devastating losses without proper safeguards.
Venezuela’s Economic Collapse: A Double-Edged Sword
Venezuela has faced one of the worst economic crises in history, marked by hyperinflation that rendered the local currency practically worthless. Amid this chaos, crypto became a savior for many Venezuelans. Citizens turned to Bitcoin and other cryptos as a way to protect their savings and access basic goods. It became a parallel financial system, giving millions a way to survive when their government-issued currency failed.
Yet, there's a flip side. Crypto scams and volatile investments have also preyed on desperate Venezuelans looking for a quick financial fix. Pyramid schemes and fraudulent tokens appeared almost overnight, exploiting people's vulnerability and desperation. Here, crypto showcased its potential for both empowerment and exploitation.
Why Context Is Everything
Crypto isn’t good or bad. It’s a tool. And like any tool, it depends how, when, and where you use it.
In authoritarian regimes:
Crypto offers financial freedom. In countries like Iran or Venezuela, where governments restrict banking and freeze accounts, crypto lets people escape surveillance and store wealth abroad.
In places with loose regulations:
People are also more likely to get scammed. Rug pulls, fake tokens, phishing attacks—these are real risks, especially for new users chasing profits in desperate times.
In developed economies:
Crypto is mostly an investment tool. A speculative asset. People buy it with the hope it’ll go up. But during a crisis (like a recession), prices often drop—just when people need cash the most.
In unstable economies:
Crypto becomes a plan B. A way to move money when banks fail or currencies collapse. It’s about not going broke.
What We've Learned
Let’s break it down simply:
✅ Crypto helps when:
You need to move money fast, across borders.
Your local currency is collapsing.
Banks are frozen or heavily restricted.
You want financial privacy and control.
❌ Crypto hurts when:
You’re using it without understanding the risks.
You leave funds on centralized platforms.
You're chasing hype in a crisis instead of managing risk.
Final Thought
In crisis moments, crypto's real value becomes visible—it provides a financial alternative when traditional systems falter. But like any powerful tool, its benefits depend entirely on how responsibly it's used.
Understanding this balance won't make you a crypto expert overnight, but next time you hear about crypto during a crisis, you'll get the full picture, and that’s more than enough.