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Bitcoin’s Meteoric Rise Exposes Bitter Irony of Russia’s Crypto Skepticism

Last Updated March 4, 2021 2:44 PM
Mark Emem
Last Updated March 4, 2021 2:44 PM

For anyone thinking of promoting bitcoin as an investment, Russia might not be the ideal place to set up shop. According to the Russian Public Opinion Research Center (VTsIOM), around 65% of Russians consider bitcoin to be a “disadvantageous investment.”

The Bitter Irony of Russia’s Anti-Crypto Attitude

While this could be attributed to bitcoin’s volatility, the finding is full of irony. To illustrate, a Russian who locked their savings in bitcoin in 2014 after the European Union and the U.S. imposed sanctions on Russia following the annexation of Crimea from Ukraine is better off compared to another who put his rubles in a bank.

On March 6, 2014, when the initial round of sanctions was imposed, bitcoin was trading at approximately $660. At the time, one U.S. dollar was equivalent to 36 rubles. Now the rubble has depreciated by roughly half while bitcoin has appreciated by nearly 1,000% in the last five years.

bitcoin price russian ruble price
Bitcoin has, to put it delicately, performed somewhat better than the ruble over the past five years. | Source: Yahoo Finance

Less Than 3 Million Russians Have Bought Bitcoin – Glass Half Full or Half Empty?

The survey also notes that only 2 percent of Russians have purchased bitcoin. This translates to around 2.9 million Russians based on a population figure of 146.8 million people, per  statistics agency Rosstat.

Another culprit that’s behind the low bitcoin popularity in Russia is poor information and knowledge on cryptocurrencies. According to the survey, around 12% of respondents believed bitcoin is banned in Russia. While cryptocurrencies are mostly unregulated in the world’s largest country by land area, this is not the case – strictly speaking.

On a positive note, cryptocurrency awareness, which does not equate to expertise, was fairly high in Russia. Around 56 percent of Russians had heard of bitcoin.

Russia’s Bitcoin Fans are Young, Male, and Urban

vladimir putin russia bitcoin
The Putin regime has sent mixed signals on cryptocurrency. | Source: AP Photo/Alexander Zemlianichenko, File

Like other similar surveys around the world have revealed, men, the young, and urbanites dominate in crypto awareness and adoption. In the 18 to 24 age demographic, 67 percent were aware of bitcoin. About 66 percent of males demonstrated cryptocurrency awareness. Around 75 percent of those living in Russia’s major cities of St. Petersburg and Moscow had heard of the flagship cryptocurrency.

Though a figure of just 2 percent of Russians having purchased cryptocurrencies is dismal, this could change in the future. Regulatory certainty is one catalyst that could tip things in crypto’s favor.

In late February, Russian president Vladimir Putin instructed the country’s legislative arm to put in place cryptocurrency regulations by July this year. While there are those who are skeptical of any regulations being instituted, regulatory clarity would bring stability to the space.

Crypto Adoption Faces Headwinds

Challenges remain, however. Russian authorities have been heavy-handed in their dealings with the cryptocurrency sector. Last year, the Central Bank of Russia ordered 22 bitcoin ATMs to be seized without notice.

On the other hand, there are also some Russian leaders who have adopted a more sympathetic attitude towards crypto. For instance, Russian Prime Minister Dmitry Medvedev said earlier this year that cryptocurrencies had benefits and any shortcomings should not be used as “a reason to bury them.”