Russian cryptocurrencies are high growth, high-risk investment, and they have no fundamental factors to provide the basis for a valuation. The only way to know how much a cryptocurrency is worth is by looking at the market price.
Russian crypto market
With this in mind, let’s explore the Russian crypto market. It’s Interesting that Russia has one of the most active crypto communities, even though its government has been hostile toward cryptocurrencies since its inception. It means something must draw them to crypto, or they would stop investing. Could it be that cryptocurrencies are offering an opportunity that investments in traditional markets don’t?
Russia’s economy and the economic structures
Let’s look at Russia’s economy and the economic structures that drive its growth. First, let’s look at Russia’s economy, then we will compare it to the US economy and finally discuss whether or not crypto is a good investment in Russia.
Russia has recently experienced an economic crisis due to sanctions by the US and Europe. Sanctions are imposed upon individuals, organizations, or countries, restricting their trade with other countries. The sanctions against Russia are because of their involvement in the political affairs of neighbouring countries such as Crimea. Whatever your opinion is on this matter, one thing remains certain: sanctions have hurt Russia’s economy.
Russia has been making substantial efforts to improve its economic situation by investing heavily in technology infrastructure and boosting entrepreneurship ( source ). It makes sense considering they must create domestic industries to provide jobs and money for their people.
Privatisation is the transfer of ownership, control or management of a business, enterprise, agency or public service from the public sector (a government) to the private sector.
It means that some of Russia’s assets, such as military contractors, railroads and telecommunications networks, are now privately owned. As such, these industries will be looking for ways to increase revenue, including advertising on websites like Facebook, Google Adwords, and even Bing Ads.
It would require the companies to use cryptocurrencies as a mode of payment because most advertising networks only accept US Dollars. A crypto ad network already exists offering this type of service called BitTeaser.
In addition, Russia is looking into tax incentives for corporations to help increase its economic growth ( source ). It creates a level playing field on the same field as other countries. In terms of taxation, Russia ranks up there with some of the most intrusive governments globally, including Argentina, Brazil and Venezuela, which have capital controls.
At least one crypto company has already taken advantage of this by incorporating their business in Cyprus, where they pay a flat tax rate of 12.5% compared to 35% in Russia, making it a good investment.
Russia vs US
When comparing how these two economies look, it has shown that at least from an infrastructure perspective, it’s clear that Russia is more advanced than the US. However, the US has more developed institutions, making it easier for businesses to form and grow. I would consider this an advantage over Russia, but the most critical factor in having a strong economy is not infrastructure or institutions; it’s peace.
War can destroy any country, including one with advanced infrastructure, political structure and economic growth like Russia. On the other hand, the US has been at relative peace for over 100 years without any significant conflicts ( source ). However, many people believe that war with Russia is imminent due to potential military conflict in Syria.
It’s recommended to invest in the US over the Russian economy. If you are looking to invest in Russia, it would be best done by investing in small-scale corporations instead of cryptocurrencies unless there is a change in governmental policy which will most likely happen if a government official or industry leader decides to adopt cryptocurrency payments.