Communism and Cryptocurrencies: Why Former and Current Restrictive Regimes Turn into Powerhouses
Failed states, former restrictive regimes and even China’s communist government seem to be especially fitting to the ethos of crypto assets.
Bitcoin (BTC) and cryptocurrencies carry a notable personal freedom ethos, and have matched US investors in their search for wealth. But what is more curious, over the past years, it is former communist countries - and current ones - which boost crypto usage.
Russia has risen as a powerhouse of crypto adoption, for anything from amateur and large-scale mining, trading, and startups powered by immense developer talent. The country was just exiting another crisis and recovering into a wealthier economy based on natural resources, when BTC happened.
The country had a history of hyperinflation and instability, with an immediate switch to a grey economy and dollarization. So it was not that hard to switch to an asset that was not the national currency, but still worked even better.
The former Eastern bloc turned out to be a special mix of newly acquired wealth, while also holding recent memory of deep economic crisis and instability. This has led to crypto adoption as a possible hedge for uncertainty, and a compensation for years lost in wealth building.
China is an entirely different story, as the country is, by persuasion, communist, with a booming free economy. The country’s crypto industry has even used the protection of the Communist Party, as in the case of Huobi, which opened an in-company Communist Party bureau.
The Chinese government has taken a two-sided policy, cracking down on scam activity, while supporting projects, especially those that show loyalty to the Communist Party. Cryptocurrency is a tool to bypass capital controls, but because of its sheer size and potential, so far China has remained lenient on mining, as well as other networks that depend on local nodes and technical teams.
The third chief reason are local regulations, which allow much freer trading and exchange activity. The EU and US regulations constantly expand reporting requirements. Russia, Ukraine and other small countries still host multiple crypto scams, boosted by the less restrictive regime.