The Ukrainian government is stepping up efforts to raise funds to support the fight against the Russian invader. Just one week into the war, Ukraine has reportedly collected more than $50 million in digital currency donations.
Two days after the Russian invasion, Ukraine's official Twitter account broadcast Bitcoin and Ethereum addresses in an effort to receive cryptocurrency donations. Ukraine reportedly raised more than $50 million in digital currency donations after the first week of the conflict.
How can Ukrainians use them in the war against Russia?
Traditionally, states at war or even invaded finance humanitarian aid or their military resistance effort by issuing war bonds: the Americans sold Liberty Bonds to their population during the Second World War. Thus, the Ukrainian state has sold $227 million worth of War Bonds at 11% since the beginning of hostilities. But Ukrainians also immediately gave bitcoin and ethereum addresses on an official twitter account, encouraging donations in these cryptocurrencies. Immediately, 50 million were collected and 100 million are said to be in the works for the second week. The aid in cryptos thus approaches the classic patriotic effort of War Bonds.
These funds come from donations from Ukrainians in the diaspora, international supporters of Ukraine's cause and even Ukrainians themselves involved in the industry. Cryptos allow for more international fundraising than War Bonds (which are not accessible on a traditional Western app or broker), more geared towards the general public (who need intermediaries to buy bonds), and transferring money from one wallet (crypto wallet) to another is much easier, more convenient, and quicker than making a bank transfer.
Also, many individuals around the world have accumulated fortunes in these cryptos, and making a direct donation has fewer tax implications than selling these currencies. It is also necessary to consider future uses: with a traditional donation, only humanitarian purposes are concerned because of the rules governing the charitable field. In the case of a cryptocurrency transfer to the Ukrainian government account, the military effort can be financed.
How can we explain this willingness to get cryptocurrencies to fund the war against Russia rather than traditional war bonds?
First, access to a global investor base, capitalizing on the sympathy generated by the Ukrainian cause in public opinion. Second, resistance to censorship in some countries (e.g. China), certain digital platforms, and Western laws governing arms financing. Finally, a willingness to stand up publicly and effectively for Ukrainians: for example, artists have issued NFTs related to the conflict, the proceeds of which go to Ukrainians. All this is still quite experimental, but at 150 million, we can say that the first test in vivo is encouraging. Finally, the classic bonds have such a credit risk that Ukrainians have to pay a dirimant rate, at almost 11% currently: concretely, in a few days, they should not be able to issue any more, and rely on donations, aid from the World Bank and... cryptos.
Ukraine is massively supported by the geek community around the world: we thought the Russian army was at the forefront of cyberattacks, but its plan in this matter, initially successful during the first week, is collapsing in front of the counter-attacks of Anonymous and tens of thousands of hackers around the world who are saturating the Russian servers. Of course, this community also includes crypto holders: an American investor recently told me that it was a real test of the power of this community and its ability to mobilize.