Crypto-War: Ukraine’s Cryptocurrency Operation Combats Russian Invasion

https://donate.thedigital.gov.ua/ 

Written by: Leah Golubchik

The current Russia-Ukraine conflict takes place during a time where war is now heavily relied on technology, which has created new dimensions to already complex circumstances. As we experience technological advancements across the world, it is impossible to rely on the status quo, and innovation is key for conquering new challenges that arise. War in the modern world becomes even more multifaceted due to these evolutions, and Ukraine is embracing these newfound opportunities in the technological sector for their own advantage.

War is costly, and Ukraine needs all of the assistance they can get when it comes to financial aid. In order to maximize this, the country has introduced a new source of financial support to support the war— cryptocurrency. Only three days into the invasion, Ukraine’s digital transformation minister Mykhailo Fedorov established official government wallets which accepted cryptocurrency payments (1). So far, the Ukrainian government has been able to raise about $67 million in order to back its defense. They have already spent about half of these funds, converting about 80% to traditional currencies, which proves how paramount these transactions are (2). This is the first time in history we have seen a sovereign nation use cryptocurrency to fund their government’s defense, which raises questions about the future of this technology and its interactions in politics and the global economy.

Ukraine has now begun to create their own NFTs in an effort to expand their reach in the crypto market, becoming the first developed country to issue its own collection of NFTs. They created the 'Meta History: Museum of War' collection of digital images, with each one depicting a different day of the conflict. According to the collection website, this NFT series is intended "to spread truthful information among the digital community in the world and to collect donations for the support of Ukraine," with the funds going directly to the government’s digital crypto wallets (3).

Ukraine has been extremely successful at capitalizing on these crypto technologies. One reason for this positive influence is that cryptocurrency is less influenced by geopolitical or macroeconomic factors, such as inflation, which allows its value to hold while the Ukrainian hryvnia depreciates (4). Along with this, due to the ease and speed behind crypto technology, Ukraine is able to accept direct donations from people all over the world in a matter of minutes. Alex Bornyakov, the country’s deputy minister for digital transformation, wrote on the nation’s donation website that, “Today, crypto is playing a significant role in Ukraine’s defense,” as President Zelenskyy signed a cryptocurrency regulatory framework into law just last week. Bornyakov also announced that the donations they have received have already been used to buy bulletproof vests, helmets, food rations, and medical supplies (5). It is clear that crypto has the potential to be a viable tool in the future of war, and can be used as a force for good in a dreadful time of history.

Sources: 

  1. https://www.ft.com/content/f3778d00-4c9b-40bb-b91c-84b60dd09698 

  2. https://apnews.com/article/russia-ukraine-cryptocurrency-technology-business-bitcoin-812902c5dd1474692be3d8d040ba7bda 

  3. https://www.reuters.com/technology/ukraine-launches-nft-museum-war-crypto-crowdfunding-push-2022-03-25/  

  4. https://www.aljazeera.com/news/2022/3/19/bitcoin-to-the-rescue-cryptocurrencies-role-in-ukraine 

  5. https://www.foxbusiness.com/markets/crypto-for-ukraine-provides-a-flow-of-war-related-assistance

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