In his monthly crypto column, Israeli series founder Ariel Shapira highlights emerging technologies in cryptography, decentralized finance and blockchain, and their role in shaping the 21st century economy.
Economic warfare is inseparable from geopolitical conflict, and as with the brutality of physical warfare, innocent civilians are often targeted. However, the rise of cryptocurrencies this time around is changing the dynamics a bit. With the Russian invasion of Ukraine shocking global markets, many digital assets are defending as a safe haven in a time of turmoil and unrest. In fact, Russians and Ukrainians use an alternative to traditional finance.
On the Ukrainian front, cryptocurrency has been used as a fundraising tool for the millions of refugee refugees and residents left behind to defend their homeland. The story becomes more complex on the Russian front. Some speculate that the oligarchy will be able to circumvent NATO’s sanctions using cryptocurrency. On the other hand, 17.3 million Russians own cryptocurrencies. Most of these people are certainly not oligarchs. One can reasonably conclude that most of them are innocent citizens who use digital assets to save their livelihood.
Therefore, it is time to clarify the situation: The Ukrainian crisis has shown that cryptocurrency is a powerful tool that allows ordinary people around the world to help others in difficult times. The cryptocurrency was previously intertwined with philanthropy, with companies such as XMANNA, the metaverse gaming platform, returning 40% of its profits to users in the form of rewards. Now the hidden charitable side of cryptocurrency is being used openly to support innocent Ukrainian and Russian refugees.
On the subject: Russia’s cryptocurrency provides no way out of Western sanctions
Ukrainians use cryptocurrencies as an economic lifeline where they are forced to give up life as they know it. Outside of the war, many cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) donate $ 108 million to the Ukrainian government and NGOs. Thanks to the openness of the blockchain, we can now better trace how these donations are used than just 15 years ago – Ukraine has already spent $ 15 million of the amount raised on military equipment.
The speed and simplicity that traditional donation platforms such as GoFundMe and Fundly can move money with from donor to recipient pales in comparison to crypto donations. While regular fundraising options can take up to five days before bank transfers are processed, cryptocurrencies are completed immediately. Even the well-known low transaction speed of Bitcoin (less than six minutes) casts a shadow over the old methods.
Ukraine’s aid initiatives are in fact just the latest and perhaps public iterations of the potential of the blockchain to transform fundraising. Projects such as SeedOn use a smart contract deposit model to ensure that funds are only available in phases, thus preventing abuse. Such models are likely to become more common in fundraising after the current Ukraine crisis.
Since Ukrainian financial institutions restrict customers’ access to their financial resources, cryptocurrency is one of the most reliable ways for ordinary Ukrainians to access their money without fear of account freezing. This is important for those who need immediate access to cash, whether it is to buy necessities or secure access to personal funds before fleeing the country.
If someone is suffering from the insurmountable effects of war, it may not be the first thing they think of downloading a MetaMask wallet, especially if they have never used cryptocurrency before. However, Ukraine is number four on the global list of countries that have already adopted cryptocurrencies, which means that a large number of Ukrainian citizens are at least able to use this alternative financing method to survive. Although access may be limited, this option has the potential to save the lives of those who have it.
Related: NFT Charitable shows new ways to give back
The other side of the sword
Several Russian banks have been cut off from SWIFT, the global messaging system that connects financial institutions. Although this penalty cuts off the affected banks from the global economy, it also affects individuals in the country by disrupting transactions made on all cards issued by major credit card networks such as Visa, Mastercard or American Express.