Bitcoin Was Made for This Moment. So Why Isn’t It Booming?

For a long time, people who were questioned about the value of the coin would say: just wait.

People look to park their savings in a digital asset that won't lose its value when inflation hits. If war breaks out, authoritarians will seize assets and impose capital controls on their citizens. Big banks and tech companies will start censoring dissidents for their political views. You will see why we need a digital currency.

As the world grew more chaotic and unpredictable, many libertarian-leaning fans of Bitcoin saw it as a kind of doomsday insurance, a form of digital gold that would be a source of stability.

Chaos is here. In the United States, inflation is rising at the fastest pace in decades, and the fear index used by Wall Street to measure expected volatility in the stock market has risen more than 80 percent this year. Last month, Canada's government responded to the threat of a protest convoy of anti-vaccine truckers by threatening to freeze their bank account, drawing calls for a type of money that isn't subject to government seizure. The Russian economy has been devastated by sanctions imposed by the United States, making it nearly impossible for its citizens to access their bank accounts, use credit cards or even post.

This is a perfect storm of economic and political events that should be great for the creation of the digital currency.

It hasn't boomed. Even as Wall Street analysts contemplate the possibility of nuclear Armageddon, the prices of cryptocurrencies have fallen. In the past month, the prices of the two most popular scurvy coins have fallen.

It isn't picking up the way you would expect it to. After Russia invaded Ukraine, the volume of digital currency trading went up, but it hasn't gone up since. Despite initial fears that they might, Russian oligarchs don't appear to be usingcryptocurrencies to evade sanctions.

It has not been completely absent from these events. In Canada, some truckers raised money through donations, while others had their wallet seized as a result of the crackdown, and the government of Ukraine has raised nearly $100 million in donations. It's too early to say whether or not the use of the digital currency will be useful in the later stages of the Russian conflict.

The global unraveling so far has not been caused by the use of the digital currency, but by other factors. Which raises the question: Why not?

One possibility is that it's hard for normal people to use it during a war. The country's elites are struggling to convert their assets intocryptocurrencies because of the spotty internet access.

It is popular among skeptics of Cryptocurrencies that they are too volatile to be used as a hedge against economic and political instability.

The president of the Bitcoin Association said that the community has been selling a false narrative for a long time. His group promotes a spinoff of the digital currency, which they see as a more useful version of the coin.

A lot of people have come up with the argument that it is meant to be.

Kevin Werbach is a professor of legal studies and business ethics at the Wharton School at the University of Pennsylvania. He said that the libertarians who were the earliest and most vocal users of the digital currency were against hyperinflation and government corruption. The recent price swings of cryptocurrencies attracted a surge of speculators who viewed them as investments and cared less about their political implications.

He said that there was a lot of rhetoric around the idea of escaping from the government-issued currency system.

The same events that could be seen as good for Bitcoin in the short term are also possible explanations for the under performance.

The Canadian trucker story got people thinking about ways of making payments without regulated entities and it caught the attention of state actors who wanted to push back.

There are more than one explanation out there. In a less stable political and economic environment, Sam Bankman-Fried, the chief executive of FTX, guessed that the discrepancy was related to the media.

Headlines have been mostly negative in nature in the last month in a reaction to statements from the industry.

The most interesting view of the usefulness of crypto during unstable times comes from the government of Ukraine.

On Tuesday, I posed a question to Alex Bornyakov, the deputy minister of digital transformation. The country's digital minister, Mykhailo Fedorov, has been working around the clock to coordinate donations for the Ukrainian army. Tens of millions of dollars worth of cryptocurrencies have been sent to these addresses, and the money has been used to buy military supplies.

Mr. Bornyakov, who was speaking from an undisclosed location in Ukranian on a video conference hosted by the artificial intelligence company Collective, said that one advantage of using the digital currency was how quickly funds could be disbursed.

In a situation like this, where the national bank is not fully operating, it's helpful to perform fast transfers, to make it very quick and get results almost immediately.

Mr. Bornyakov was wary of overstating the importance of the Ukrainian cause.

Mr. Bornyakov said that the role of the crypt is essential in helping the army.