This story is part of War in Ukraine, CNET's coverage of events there and of the wider effects on the world.
Artyom Fedosov was confused when his cab driver announced his credit card had been declined. Luckily, the 27-year-old Ukrainian photographer had a backup card. But when he offered it, that one strangely didn't work either. In a last-ditch effort, Fedosov went to an ATM to try to withdraw money from his debit account. The machine rejected him too.
"That's how I found out," Fedosov told me in a recent interview via Zoom, "I'd lost access to my savings."
This "terrifying" moment was in late February, days after Russia's invasion into Ukraine. Fedosov wasn't in his home city of Kiev, but rather in Kazakhstan. It was supposed to be a weeklong stay at the end of a photography trip to the Middle East, but Russia's invasion meant Fedosov could no longer go home.
Since his ill-fated taxi ride, Fedosov been living off cryptocurrency. He found a bitcoin ATM in Kazakhstan, which allowed him to exchange fragments of the cryptocurrency for Kazakhstani tenge. He has since opened a bank account in Kazakhstan, funded exclusively by selling cryptocurrency, and moved to Germany. To bolster his funds, Fedosov is also selling photographs as NFTs -- people buy them in ether, which he converts to cash -- and he expects that will fund a few more months' worth of expenses.
Fedosov is one of approximately 5.5 million Ukrainians who own cryptocurrency. His ability to live off bitcoin and ether is music to the ears of cryptocurrency proponents. They point out that situations like Fedosov's, when the financial system stutters or fails, are the precise reason bitcoin was created. Using a cryptocurrency wallet -- as opposed to going through an intermediary exchange like Binance -- holders can access their cryptocurrency with nothing more than an internet connection and a 12-word seed phrase.
Millions of Ukrainians and Russians lost full access to their money in the days following the invasion. Hoping to access ATMs, queues of people snaked around city blocks in both countries. Banks quickly placed restrictions on cash withdrawals. This was particularly acute in eastern Ukraine, where much of the fighting is taking place. The central bank of Donetsk, a region of 2 million people which has declared itself autonomous from Ukraine, limited citizens to withdrawals of just $130 a day. There are anecdotal reports of people in the east being completely unable to withdraw their savings or access their credit.
"It was crazy," said Fedosov. "In the beginning, the rules would change several times a day."
Thankfully, banks' worst fears have so far been unrealized. Most Ukrainians, including ones abroad like Fedosov, have regained at least limited access to their funds. Yet the situation is still fraught. The central banks of both Russia and Ukraine have placed restrictions on foreign currency withdrawals. Ukraine's biggest commercial bank, PrivatBank, issued a plea on Twitter, asking for armored trucks with which to transport cash to ATMs. In the days following war's outbreak, Russians fearing what sanctions would do to the ruble chose to plow money into bitcoin. (The ruble is down around 30% to the dollar since the invasion.)
"Bitcoin is kind of the perfect war asset, unfortunately," said Sam Callahan, an analyst at Swan Bitcoin. "You have wealth stored in your head with 12 words, it's a lot different than even gold or art, hung up in the banks or in vaults. People can cross the border with nothing that can be confiscated, and with 12 words in their head have their wealth."
Callahan's statement would be contentious in traditional finance circles. Critics say that cryptocurrencies are too volatile to act as hedges against inflation, much less the collapse of a monetary system. But after two years of dizzying price movements, it's a reminder that bitcoin and other cryptocurrencies were designed to be more than speculative assets.
Already, cryptocurrency has had an outsized role in the war. The Ukrainian government has managed to raise over $60 million for the resistance effort merely by posting its bitcoin and ether wallet addresses on Twitter. Millions more have been raised for local charities and NGOs. Not all crypto prospects are positive, though. Some are concerned that Russian oligarchs will use cryptocurrency to evade the historic sanctions the West has placed on Russia. Just like global charities are likely to emulate Ukraine's crypto fundraising, Fedosov worries that repressive regimes in Iran and Syria would follow Russia's example if the country could evade Western sanctions using bitcoin and ether.
Callahan says this is unlikely. The combined market cap of bitcoin and ether is around a trillion, too little for a country as large as Russia to meaningfully circumvent sanctions. Some oligarchs may be able to move some funds around, though Callahan argues it would be difficult to convert large quantities of money from cryptocurrency to fiat without alerting blockchain analysis firms. Still, he concedes that bitcoin can be used by those with nefarious intent.
"It's an open-source network, it's going to be used by enemies, it's going to be used by friends," he said. "It'll be used by drug traffickers, but it'll also be used for charities. A knife can be used by a surgeon, it can also be used by a murderer."
Fedosov's story is a fortuitous one. He has about $5,000 in ether, he says, because just three months before the invasion he decided to convert money to ether in order to begin trading NFTs -- nonfungible tokens, which are recorded on a blockchain . He only has bitcoin because, back in 2017, Fedosov worked for a Dutch company and said it was easier and quicker to be paid his salary in bitcoin. In the years since moving to a new job, the leftover fraction of a bitcoin in his wallet increased in value from a few hundred to a few thousand dollars.
Back then, Fedosov thought bitcoin was a novel alternative to traditional money. Now he thinks it may be just as reliable -- and is thankful he didn't happen to spend his last chunk of bitcoin all those years ago. When asked how he had crypto to fall back on, he simply replied: "It's pure luck, actually."