Crypto and Blockchain Provide Lifeline in Ukraine's Defense Against Russia
Cryptocurrency and blockchain played a key role in revitalizing and digitalizing the Ukrainian economy until Russia's invasion. Now crypto is being used as a lifeline for more than $56 million in donations to the war ravaged country.
Donations from a number of crypto assets are being used to help distribute aid in Ukraine as well as provide food, uniforms, bullet-proof vests and other supplies. Funds are also being used by the country's cyber warriors to procure intelligence and allegedly deface Russian websites and even take down certain military systems.
Before the Russian invasion, however, blockchain and digital assets were meant to help revitalize the country as well as bring Ukrainian government processes online. According to Alexander Bornyakov, deputy minister for digital transformation in Ukraine, the country has been working on a number of blockchain initiatives over the past two year. These include creation of a central bank digital currency known as the e-hryvnia, which was supposed to be introduced near the end of this year. The currency was created in conjunction with the National Bank of Ukraine.
Ukraine's goal was "to move 100 percent of government services online and build a digital state to make all the government services transparent, easy to use, and convenient for citizens of Ukraine,” said Bornyakov. Now the government is trying to use its experience in crypto and blockchain to help fight the Russian invasion. According to Bornyakov, it became clear by the second or third day of the war that banking liquidity was a problem for Ukraine and that the country could benefit from soliciting crypto donations.
"We decided to go and create wallets and build this infrastructure to get money and send money [crypto] to different suppliers, so that we could buy all of the things that the army needs,” he said. The government enlisted the help of Kuna, the largest crypto exchange in Ukraine, to ensure the funds could be moved and distributed securely.
The effort has not been seamless, however, as was the case last week when the government announced a token giveaway, or "airdrop" on Twitter for those who donated within a certain timeframe. The event attracted a number of fraudsters and the giveaway had to be canceled within 24 hours. The government is now promoting NFT sales as a means to help its army, although the proceeds will likely not be used until after the war.
Ukraine is also fighting back against Russia on the crypto front, as the country fears Russia will turn to crypto to boost its economy in response to the slew of recent Western sanctions recently announced. The country asked major global crypto exchanges to stop serving all Russian clients and traders and not merely those on sanctions list.
But most of those exchanges have rejected the requests, arguing that such a move against an entire population would be potentially illegal and against the ethos of crypto.
Edited by Luke Bellos
