Cryptocurrencies rise in popularity in world's conflict zones
People in the world’s major conflict zones are turning to cryptocurrencies such as bitcoin as soaring values and the backing of super-rich investors make them more attractive.
Online searches for bitcoin, ethereum and dogecoin have increased in Libya, Syria and Palestine, pushing aside the usual focus of interest in stock markets and safe-haven investments in gold and property.
Publicity surrounding the new breed of digital currencies has spread across the world since the pandemic struck and meant users have also looked to them as a way to borrow when banks have become reluctant to lend money.
Tesla’s owner, Elon Musk, is among the most high-profile supporters, adding his tweets of approval to other celebrity backers including the actor Gwyneth Paltrow, the rapper Snoop Dogg, and the billionaire former Microsoft chair Bill Gates.
Last week Tesla bought $1.5bn in bitcoin in a move that propelled the currency to a high of almost $43,500. It has since increased again to almost $48,000 before falling back on Tuesday to $46,250, an increase of more than 300% since February last year.
Digital currencies, unlike the pound, dollar and euro, are not backed by a central bank that can print money to meet growing demand. There are a fixed number of bitcoins and they are traded and registered on a ledger that is not part of the banking system or visible to regulators.
Analysis by TradingView, one of the top 100 most-visited websites in the world, found that countries that rank at the bottom of the Human Freedom Index, or that are politically turbulent for other reasons, appear in the top 10 countries for online digital currency searches.
Using data from 27m search inquiries from its 100 million users between November 2020 and January 2021, the firm found that when searches were calculated as a percentage of all inquiries, more than half in Cuba (50.4%) were made about cryptocurrency assets, an increase of 12.2% on last year.
Online inquires made up 42.2% of the total in Libya, 41.9% in Ukraine and 38.7% in Palestine, putting them all in the top five for cryptocurrency searches while Syria at 36.9% was 10th, suggesting that countries with high levels of instability are proportionally more interested in digital assets than more developed nations.
James Maddison, the UK head of TradingView, said he could only speculate about why digital currencies were becoming popular in less developed countries, but a switch away from hard currencies was likely to be popular in areas of the world where it was difficult to access foreign currency, hoarding cash was subject to crime, and restrictions on lending by high-street banks and the closure of branches were common.