The Role of Cryptocurrency in the Ukraine Conflict

cryptocurrencies Ukraine
The war in Ukraine has generated millions of words and strong emotions. This blog post will not repeat what so many other writers have already said. Instead, one topic which has hit the news is Ukraine’s use of cryptocurrency for donations. 

While most governments around the world have cautiously welcomed innovation in the crypto sector, very few have embraced it directly. (El Salvador, of course, hit the headlines when they announced they were making Bitcoin legal tender.) 

On February 26, something happened which has never happened before in the world. The official Twitter account of the Ukraine government tweeted two wallet addresses (one Bitcoin and one Ether) and requested donations. By March 10, they had received more than $100 million worth of crypto: Bitcoin, Ether, USDT and many random ERC-20 tokens and NFTs. 

Instead of having to route the payments through banks, which could take days or weeks, the government was instantaneously able to access the donated funds.

Track transactions with transparency

You may be wondering what makes this story so unique. Apart from showing a government that was technologically at ease and prepared to set aside the usual bureaucracy and red tape in an emergency, this was the first time people had been able to make charity donations on this scale and see them moving in real time on a public ledger. 

Oleksandr Bornyakov, Ukraine’s Deputy Minister of Digital Transformation, was tweeting about crypto even before the war, and on March 11 shared how the government was using the funds. In the same week, he appeared on a Twitter Space with Vitalik Buterin to discuss the use of crypto donations.

It is fascinating to watch the inflow of donations in real time. If you visit the Ethereum address for the official government wallet anyone in the world is able to keep track of the transactions and the wallet balance – and in many cases where the donors have used their ENS names, it is instantly possible to see who donated. 

By March 11, there had been more than 71,000 transactions in and out of the wallet, including around 1,000 NFTs. Notable donors included NFT collective Bored Ape Yacht Club, who sent $1 million (https://etherscan.io/tx/0x3a552454cf6a7a3b349ac521e62da508e6731a01c19f931e8f67a1048e0349c3) and 

It is not just the official account that has attracted donations: some people have also supported the cause by sending crypto to UkraineDAO and another group called Come Back Alive, which supports the nation’s military.

Patreon recently suspended Come Back Alive because it broke regulations around donations for military purposes but they were able to continue their work thanks to the permissionless nature of cryptocurrency.

Confusion and controversies

Originally, the Ukraine government planned to airdrop ERC-20 tokens to donors, which would have been the first time a sovereign government had done this. After a flurry of rumours and counter-information, they later tweeted that they were cancelling the airdrop and issuing NFTs instead.

This confusion was not the only drama happening on crypto Twitter. Some well known crypto personalities have not emerged from this story with their reputations intact. Tron creator Justin Sun was quick to complain on Twitter that the potential airdrop would exclude Tron users, prompting a huge backlash. 

Similarly, Gavin Wood attracted some criticism for requesting that the Ukraine government set up a Polkadot address but redeemed himself by donating $5m worth of $DOT to the cause.

Promoters of minor cryptos saw it as their chance to publicise their own coins, as these donations are, of course, instantly visible to anyone browsing the transactions. However, with money going to the cause, few people criticised them for that.

And, of course, the fund-raising drive has attracted the usual swarms of scammers posting their own crypto addresses in the hope of confusing well-meaning donors. Fortunately, the open nature of blockchain networks means that it is easy to double-check the correct address before signing the transaction. 

How can I make sense of the transactions?

Of course, you can simply read through lists of transactions on Etherscan, but it is more or less impossible to make sense of pages and pages of thousands of entries. At Skytale, we’ve been using our app to analyse the wallet’s activities.

The public nature of Ethereum means that you can use Skytale to analyse the transactions of any wallet in the world, not just your own.

And Skytale’s functionality goes far beyond downloading a .csv: the ability to add custom tags and filter out scam transactions means that you can process the data in the .csv in a meaningful way. 

Simply add the public address of the Ukraine government wallet in your Wallet Management screen and tag the transactions in any way you want. You can then export the .csv and process it in any way that makes sense to you. 

Why does this matter? Analysing something that is so important to world events is not simply a matter of curiosity.

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