Ukraine crisis: Crypto funding a watershed moment for the war torn nation

April 4, 2022

By Murtuza Merchant

For a country whose armed forces would be dwarfed by the Russian military, Ukraine has resorted to creative means in order to mount a strong resistance against attacks launched by its neighbor.

The second-largest country in Europe after Russia, Ukraine launched a crowdfunding initiative on February 26 this year and has raised more than $46 million in cryptocurrency donations alone, according to cryptocurrency analytics firm Elliptic.

While Bitcoin (BTC) and Ethereum (ETH) made up most of the donations received, some donors have sent Non-Fungible Tokens (NFTs) instead. Subsequently, Ukraine’s Vice Prime Minister Mykhailo Fedorov announced the country’s plan on March 3 to launch an NFT collection and use proceeds to support the country’s efforts in the war against Russia.

This move has effectively broadened the East European country’s crowdfunding initiative to cover most crypto assets and is a further nod to the potential of cryptocurrencies to act as a better currency mechanism for financial transactions.

Pratik Gauri, CEO of 5ire Chain says this is a classic example of how crypto and especially NFTs are helping aid Ukraine’s government in the aggression against Russia.

“Three kids in London named, Isaac Kamlish, Nathan Cohen, and Isaac Bentata — ages 23 to 25 — gathered around their laptops earlier this week and helped launch the first-ever sale of one-of-a-kind digital collectibles by a national government.  They asked the same questions you and I have and did something about it.  Crypto and the NFTs helped directly impact things that matter to each one of us,” he says adding that what is astonishing is that three kids in their 20s helped the national government of Ukraine raise money by selling more than 1,200 non-fungible tokens, or NFTs, raising about $600,000 to help fund its defense against Russia.

He added that the old school techniques like war bonds have raised significant funds as well, where Kyiv has hauled in roughly $1 billion from war bonds sold to people and institutions in Ukraine, as residents show a willingness to lend to the government.  “But, it deserves to mention that no backroom deals were made not stakeholders were consulted and a fairly naive set of diplomates in their 20s raise $600k for Ukraine,” Gauri says.

For the uninitiated, cryptocurrencies are digital tokens that operate using blockchain technology and are independent of any government agency or central banks in terms of control exercised on the actual workings.

As a result, cryptocurrencies are not subject to any sanctions that may be imposed by a particular country and can facilitate financial transactions even in the midst of a war, as demonstrated by Ukraine’s example.

NFTs are crypto-based assets that are essentially digital versions of a physical asset or service in the real world and have seen remarkable traction amongst the global crypto community. Hosted on blockchain protocols themselves, NFTs are immutable and hence reserve exclusive rights for usage with the owner only. This enables NFT owners to share and monetize them, without worrying about aspects like receiving royalty payments or proving ownership.

Ukraine’s Ministry of Digital Transformation will be spearheading the launch of Ukraine’s ‘Meta History: Museum of War’ NFT collection, comprising 54 rare collectibles that will document memories of the current Ukraine war and preserve them for the digital community.

This is another use case where NFTs can help preserve moments in history more accurately and can in turn be shared with the entire global community through NFT hosting sites. To be minted on the Ethereum blockchain, each NFT will be offered for 0.15 ETH, or around $500, and buyers can subsequently sell them on secondary markets, with some royalty flowing back to the country’s Ministry of Digital Transformation.

By pledging that 100 percent of the funds collected from the sale of this collection will be utilized to support Ukraine’s army and civilians, it is a stellar example of how NFTs and cryptocurrencies together can enable social equity and help in achieving peace.

Raghav Gupta, founder of EquiDEI, a fintech startup that seeks to solve the credit deficit and operational issues faced by MSMEs across the world, says Ukraine’s war has been devastating and has caused various civilian casualties while putting major towns and cities at risk which has shed light on the importance of digital literacy.

“The government of Ukraine facilitated the transfer of non-fungible tokens and cryptocurrencies, such as bitcoins and other cryptocurrencies, and established links. More than $6.7 million was raised through the sale of an NFT of Ukraine’s flag by UkraineDAO, and now is in the process of expansion of the fundraising push, Ukraine has begun auctioning a collection of non-fungible tokens (NFTs) and has already raised more than $65 million for its war effort – called Meta History,” he adds.

For those who end up supporting Ukraine’s cause by purchasing any NFT in the ‘Museum of War’ collection, they would themselves be a part of history and be remembered forever for their noble donation. In fact, every subsequent holder will also be a part of the ledger and could lead to the formation of a digital group that helped Ukraine in its darkest moments.

While the world may still be divided over the merits of crypto assets like cryptocurrencies and NFTs, Ukraine’s crowdfunding and NFT sale is a firm reminder of how blockchain is helping improve human life by turning seemingly impossible events into a reality. All things considered, it does offer us a glimpse into a future where social causes will be supported irrespective of geographic, cultural, or sovereign boundaries.

Ukraine, a country ranked fourth on Chainalysis’ Global Crypto Adoption Index, behind only Vietnam, India, and Pakistan, has about $8 billion of cryptocurrency passing through the country annually in any case has welcomed cryptocurrency intervention in a way never envisaged before.

Ukraine’s digital wallets are collecting millions to fund the country’s defense. The last few weeks have seen millions of dollars inflow in to support Ukraine’s army and its citizens. It is also being speculated that Russia may use cryptocurrencies to get past the sanctions slapped against it by the US and European Union (EU). The country has received donations of over US$45 million so far. The Russia-Ukraine war has also truly underscored the importance of regulating cryptocurrencies.

Raj Kapoor, chief advisor at Acryptoverse, a blockchain, and crypto advisory firm, says, “This time the world is leveraging an unlikely weapon amid the war in Ukraine — cryptocurrencies. The 21st Century world is arming itself with digital currencies in an inaugural war of the crypto age.”

A crypto collective called a DAO is raising money for Ukraine through an NFT sale. Known as Ukraine DAO has been established to gather funds for Ukrainian soldiers who are fighting the Russian army. UkraineDAO has kicked off with issuing a 1/1 NFT of the Ukrainian flag, minted by CXIP, to generate donations for Ukrainian civilian groups to assist people affected by Putin’s conflict, he says.

DAOs are the most decentralized form of organization currently available. They lay the groundwork for creating customer-driven applications and platforms that reflect the future technological and interpersonal communication trends, which are decentralized and community-run. During this early stage of DAO development, the sector must capitalize on its financial positions and token values to promote a positive influence – energizing a social accountability practice within these new enterprises. A charitable group in Ukraine called Come Back Alive collected $4 million worth of crypto to boost its efforts in supplying military gear and medical kits to the country. In total, Ukraine’s government and other organizations have raised a whopping $25 million-plus through more than 23,000 crypto donations since the start of the Russian invasion! And now, the West has also begun leveraging crypto in support of Ukraine.

Aliasgar Merchant, a developer relations engineer at Ignite (formerly Tendermint), says Western sanctions already have begun wreaking havoc on the Russian economy and have crippled the ruble, making it worth less than even Robux, the digital token underpinning the Roblox metaverse. Bitcoin trading volumes using the ruble and Ukraine’s hryvnia have surged to their highest level in months, indicating the cryptocurrency could be more attractive in those markets.

“The war has put the spotlight on crypto as it arises as an alternate payment mechanism, particularly in topographies confronted where international dangers are impending. At the point when the fiat financial framework self-destructs, crypto will be the main deliverer,” Merchant says.

The next wave of decentralized virtual and digital platforms—the community affinity towards global philanthropy is a natural progression. Crypto-based giving has been steadily on the rise and the impact is clear in this conflict –  Ukraine immediately realized the opportunity at hand as even the government opened up options for direct crypto donations.

The quick connectivity and the inherent transparency of blockchain make it an ideal platform for humanitarian aid. In moments of crisis, it underscores the importance of seamless integration between the social networks that we use every day, and the financial infrastructure that has been historically siloed from those social networks. The Web 3.0 community rises to the occasion and the results would set a precedent for future wars or otherwise.

 


About the author

Murtuza Merchant is a senior journalist and an avid follower of blockchain and cryptocurrencies.

 

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