In the wake of the Russian invasion, we have seen bitcoin and cryptocurrency in general emerge as a helping hand. When Ukraine went to Twitter to ask for cryptocurrency donations, the crypto world responded. In their tweet, they asked people to “Stand with the people of Ukraine” by donating crypto to help raise money for the army, along with anything else needed. Ukraine left a bitcoin and ethereum address for people to donate their bitcoin, ether, or tether (along with any ERC-20 token). As of March 2nd, crypto investors have donated over $30 million in crypto in just a handful of days to support the Ukrainian government. This number is still growing massively.
While all of this raised crypto still doesn’t touch Ukraine’s $4 billion military budget, these donations show just how important crypto can be in several different sectors.
With that said, how can bitcoin and other cryptocurrencies be used to help the people of Ukraine and Russia during this trying time? There are several ways crypto can help both sides of civilians, including the funding mentioned above. Let’s get into the two possible ways crypto can be used.
Also, one thing you must know before you read this article is what fiat is. Fiat currency is money that is not backed by gold or silver, and is usually declared legal tender by governments. For example, the U.S. dollar is a fiat currency.
Crypto donations are better than fiat donations
As we saw in the first paragraph, cryptocurrency is starting to emerge as a way to donate to organizations in need. Not only this, but crypto donations are generally easier and faster than most forms of fiat donations. With crypto, anyone anywhere in the world can easily send their bitcoin to Ukraine’s wallet address, which makes it easier than going through a crowdfunding company. Crypto donations can arrive almost instantaneously, rather than having organizations wait for the money. Crypto donations don’t have to go through middle men and banks for organizations to obtain their money.
One example to show the success of crypto donations was the organization, Come Back Alive, whose goal is to raise money to arm and train military personnel in Ukraine. After being kicked off of the popular crowdfunding website Patreon for violating rules against funding for military activity, Come Back Alive has instead raised millions of dollars of crypto through UkraineDAO. UkraineDAO is a decentralized autonomous organization created by the Russian protest group Pussy Riot to support Ukraine.
“Blockchain allows us to scale our efforts in a way that wasn’t possible for us before . . . The old ways of raising money sometimes are really slow and just clumsy,” Nadya Tolokonnikova, a member of the group partnering with Come Back Alive, stated.
This shows that crypto has been proven to be a great place for crowdfunding, along with other forms of donations. However, one downside to using crypto for donations is that it can easily get sent to the wrong wallet address. People who want to donate to Ukraine must make sure they use exactly the same wallet address that the organization is using. Many scammers can claim they are raising money to help Ukraine, or they can just say they are from Ukraine and need money. Due to this invasion of Ukraine, there have been a large number of new scammers claiming to be from Ukraine just to get donations. People must make sure when they donate crypto that the source they donate to is an official organization.
Crypto can replace fiat currency
As many of us know, the Russian ruble is collapsing in value, and it is at an all-time low. Several sanctions and other economic strains have been put on the Russian economy, such as removing Russian banks from SWIFT. Unfortunately, these sanctions and bans have also hurt the Russian people. Their currency and economy is crashing, and many Russians are flocking to the bank to withdraw money.
Possible solution? Crypto can be used to replace the falling ruble. The Russian government should start to consider Bitcoin or a self-created stablecoin as a form of currency to replace the ruble. Even if they don’t, Russian people can still convert their money into bitcoin, tether, or ether through a third party. This would ensure that Russian citizens’ money does not collapse with their government. Since bitcoin is decentralized, Russian citizens can access it from anywhere in the world.
In fact, we are already seeing signs of Russian citizens doing exactly that. The USDT/ruble pair trading volume is exploding, showing that Russians are transferring their money to USDT, a stablecoin that is “backed” by the US dollar. Other cryptos like bitcoin and ether are also jumping in price due to people in Russia and Ukraine converting their falling currencies into cryptocurrency.
While some people are asking cryptocurrency exchanges to ban any Russian crypto transactions as another form of sanctions, many exchanges like Binance understand that the Russian people still need a way to exchange their currency to a more stable one.
Not only Russians, but Ukrainians are suffering from their fiat currency as well. The Ukrainian hryvnia has been dropping since the invasion as well. Also, due to Russian hacks and other infrastructure problems, many Ukrainians are unable to use credit cards or easily pay online. Therefore, Ukrainians can also switch to a cryptocurrency or the euro.
All in all, crypto has proven to be a safe-haven for many people in Russia and Ukraine. With the Russian and U.S. stock markets going down in the past couple days due to this alarming war, Bitcoin and other cryptocurrencies have instead gone up. Has Bitcoin proven to be a better hedge against war than stocks and gold? So far, the answer is yes for many Ukrainians and Russians. However, with time, we could see other unforeseen effects that war could have on all markets.
If you have any other ideas on how crypto can help the people of Ukraine and Russia, you can share your thoughts in the comment section below this article.
Good information – great article!