paint-brush
How the War in Ukraine Unveiled the True Potential of Cryptoby@viceasytiger
431 reads
431 reads

How the War in Ukraine Unveiled the True Potential of Crypto

by Vik BogdanovOctober 11th, 2022
Read on Terminal Reader
Read this story w/o Javascript
tldt arrow

Too Long; Didn't Read

Russia's unprovoked full-scale aggression against Ukraine clearly demonstrated the true value and potential of the cryptocurrency. The war "set a new trend" that came to the crypto world from the world of philanthropy – a crypto fund. It became a highly effective financial mechanism for international organizations raising funds in support of Ukraine. During the first three months of the war, the Ministry of Digital Transformation, volunteers, and private initiatives raised a record $125 million in cryptocurrency donations for Ukraine. The Everstake platform collected a crypto equivalent of $10 million for the needs of the Ukrainian Army.

Companies Mentioned

Mention Thumbnail
Mention Thumbnail

Coins Mentioned

Mention Thumbnail
Mention Thumbnail
featured image - How the War in Ukraine Unveiled the True Potential of Crypto
Vik Bogdanov HackerNoon profile picture

This sounds like a paradox, but Russia's unprovoked full-scale aggression against Ukraine clearly demonstrated the true value and potential of the cryptocurrency: freedom of the digital world, speed and security of cross-border transfers, elimination of intermediaries, and ability to more easily overcome the barriers of traditional financial systems.

The war became a massive catalyst of change within the global crypto community which, in tandem with the Ukrainian state, helped crank support for the Ukrainian Army and refugees up a notch.

The war "set a new trend" that came to the crypto world from the world of philanthropy – a crypto fund. It became a new highly effective financial mechanism for international organizations raising funds in support of Ukraine.

On top of that, crypto became a lifeline for millions of Ukrainians affected by the war.

But before we delve deeper into how exactly the war in Ukraine unveils the true potential and value of cryptocurrency, let's recall how it all started.

Crypto Donations Boom As a Response To Martial Law-Caused Restrictions

On February 26, 2022, Ukraine's official Twitter account announced it was ready to accept donations in crypto (BTC and ETH).

This news led to an almost immediate surge in donations: they just poured in. The very next day, an anonymous donor deposited a BTC amount equivalent to $1 million to the Ukrainian government's crypto wallet.

On March 1, Ukraine opened the Polkadot (DOT) wallet in response to a tweet by its founder Gavin Wood where he promised to donate $5 million if a DOT address were available. Wood did keep his promise: he eventually transferred 298+ DOT worth $5.7 million.

By March 11, Ukraine had received donations in the form of 120,000 crypto-assets for a total amount of $63.8 million, of which $54.4 million came from Bitcoin, Ethereum, TRON, Polkadot, Dogecoin, and Solana addresses. 

Besides crypto, people and organizations donated NFTs, each worth approximately $300.

"Now even meme can support our army and save lives," Mykhailo Fedorov, Ukraine's Minister of Digital Transformation. 

The Everstake platform collected a crypto equivalent of $10 million for the needs of the Ukrainian Army, of which $3.4 million went to the Aid for Ukraine charity fund and was used for the purchase of first-aid kits, food kits, body armor, drones, and fuel. The remaining $6.6 million was distributed among other volunteer organizations, including the Kyiv School of Economics Charity Fund, Peoplesproject.com, Palianytsia.org, Open Eyes, and others. 

These funds typically raise funds to purchase thermal imaging cameras, armored vehicles, and drones, as well as to help Ukrainian refugees worldwide.

Also, thanks to NFT platforms, many artists are able to draw the attention of NFT collectors from all over the world to the war in Ukraine. They tokenize their artworks, sell them, and the proceeds go to charity.

During the first three months of the war, the Ministry of Digital Transformation, volunteers, and private initiatives raised a record $125 million in cryptocurrency donations for Ukraine.

Crypto Philanthropy In Times of War

Volunteering practices quickly showed that using crypto was the fastest and most convenient way to purchase abroad. That gave a massive push to the trend of crypto philanthropy: many local and international organizations were convinced of crypto's advantages over fiat and rushed to open their own crypto wallets.

The Red Cross started accepting donations in cryptocurrency, and UNICEF launched a crypto fund as a new financial mechanism for working with cryptocurrencies.

What's also interesting is the fact that more than half of all crypto donations received by the Ukrainian foundations were spent using crypto. 

Crypto philanthropy is currently beneficial to Ukraine from two points of view.

First, transactions take place in a matter of minutes, which is a huge advantage over the traditional banking system. Secondly, the ease and transparency of making a donation and the absence of third parties when performing transactions from decentralized wallets encourage patrons to further help Ukraine fight against the aggressor. As crypto enthusiasts say,

Digital currency is now more than just an asset. Currently, this is the fastest and most guaranteed way to provide life-saving assistance.

Helping the Ukrainian Army that fights the aggressor is not the only thing that crypto can do for our country. 

Crypto as a Life-Saving Asset for Millions of Ukrainians Worldwide

Statistics show that the Ukrainian crypto segment has been seeing rapid growth for the past few years. According to Global Crypto, in 2021, the annual turnover of the crypto market in Ukraine exceeded $8 billion, and the volume of transactions reached $100 million per day. In fact, one in eight Ukrainians (approximately 5.5 million people) had crypto last year. On top of that, Ukraine ranks 3rd (out of 20 countries) in The 2022 Global Crypto Adoption Index by Chainalysis. 

For the cryptocurrency market in Ukraine, the war became a shock that transformed into an unexpectedly significant increase in transactions.

In times of upheaval, people traditionally choose a protective asset for themselves, and cryptocurrency has become such an asset in Ukraine!" Binance Ukraine GM Kyrylo Khomjakov.

When the number of refugees from Ukraine exceeded 5 million, the crypto-exchange Binance initiated changes in the corporate classification. Ukraine finally moved from the CIS region to the CEE (Central and Eastern Europe) region. The idea was to provide Binance cryptocurrency cards to all Ukrainian refugees with children until Ukraine's Virtual Assets Bill comes into effect. 

As I wrote before, in March of this year, the President of Ukraine signed the Virtual Assets Bill, which allows Ukrainian banks to open accounts for crypto companies and citizens to protect their savings in virtual assets. However, it'll come into effect only after amendments to the Tax Code, which can take time.

Restrictions introduced by the National Bank of Ukraine under the Martial Law made it difficult to transfer funds from Ukraine to EU countries, so cryptocurrency has become the fastest and most convenient way to replenish their wallets for many Ukrainians.

Ukrainian refugees can use crypto-wallets and Binance cards within the EU with no restrictions, which gives them an alternative option to pay for goods and services besides fiat.

In addition, the most vulnerable groups of refugees were given the opportunity to register and receive financial assistance from Binance and other crypto companies – an equivalent of $75 per month per person for three months. More than 5,000 Ukrainian refugees have already taken advantage of this opportunity, including single mothers suffering from chronic diseases and representatives of ethnic minorities.

As a Ukrainian, I'm personally grateful to every single "Cryptonian" who donates crypto assets and NFTs to support Ukraine's fight for peace, freedom, and democratic values. You're AWESOME. Thank You! 

If you want to donate to Ukraine, please check out this verified list of official links where you can send support in crypto, including those launched by the Ukrainian government.