On 24 February, Russia launched an offensive against Ukraine with the aim of capturing its territory and putting it under Russian control. What was meant to be an operation that lasted hours, and if not, days, has so far failed. This is due to the strength of the Ukrainian army, government, emergency services, and regular people who have stood up to Russian aggression and supported each other in any way they can.
We must also acknowledge that the ability of Ukraine to stand strong is also in part down to people across the world who have provided support through donations to the Ukrainian bank and army, as well as refugee and other humanitarian agencies that are operating on the ground in the country. For this, the team at INC4 is extremely grateful.
Focusing on donations from private citizens, it is amazing to see how much of a role cryptocurrencies have played. After the initial strike, the Ukrainian government set up accounts into which people could donate BTC, ETH, and USDT, helping contribute to the US$59.7 million raised so far. This conflict has shown the ease and speed of donating funds through blockchain, while also highlighting the feeling of social responsibility throughout the crypto community.
In this blog post, we will take a look at how blockchain and crypto has been used to help relieve the ongoing humanitarian catastrophe that has risen from this war, the advantages of blockchain donations, and also things to be wary of. We will also go beyond this immediate case, looking at how there are many current initiatives aimed at slowing climate change and helping with humanitarian assistance around the world.
How has blockchain and crypto been used in the Russian war against Ukraine
As the war got underway, the Ukrainian government understood that they would need to take quick decisive actions, despite the pre-planning that had gone into countering a possible Russian invasion. Aided by Ukraine’s Ministry of Digital Transformation, government social media accounts alerted those around the world to verified addresses where crypto users could easily donate money.
Along with fiat currency donated to the Ukrainian bank, army, and humanitarian agencies, the equivalent of US$50 million had been raised by March 5, of which more than $15 million has been sent. Along with straight crypto donations, NFT initiatives have also been started; one of the most famous, Ukraine DAO, was founded by the head of activist group Pussy Riot, Nadya Tolokonnikova, and has already raised close to $7 million.
As we can see, blockchain has played a large part in gathering funds; but is donating in crypto really any better than donating fiat currency? Let’s take a closer look at the upsides and possible downsides.
What are the advantages of blockchain donations?
The big plus when sending crypto donations is the lack of middlemen. In addition to the crypto addresses, there were also opportunities to send donations to Ukraine through SWIFT; but of course, this can take a couple of days to come through. In a conflict such as this, speed is crucial to the aid effort.
Unlike a normal donation, a blockchain donation doesn’t just get sent and disappear. You can track who it goes to, whether it gets passed on to another party, and in some cases, even how it is used. This also has benefits in terms of being able see what is being sent to make future decisions for more effective aid.
Crypto donations mean that anyone can get quick access to needed funds; whether that be those who are outside of the normal banking system, or those who face government oppression, and may not be able to receive help through regular channels.
More bang for your buck
From Greenpeace to Unicef (although the former has banned Bitcoin donations due to emissions), charity funds accept cryptocurrencies and advertise its tax benefits to donors. On the charity’s side, they also get the full value of the contribution, without having a small percentage taken by middlemen.
Mykhailo Fedorov on Twitter: “Stand with the people of Ukraine Now accepting cryptocurrency donations. Ethereum. Bitcoin and Tether (USDTtrc20) BTC — 357a3So9CbsNfBBgFYACGvxxS6tMaDoa1P ETH — 0x165CD37b4C644C2921454429E7F9358d18A45e14 USDT (trc20) — TEFccmfQ38cZS1DTZVhsxKVDckA8Y6VfCy” / Twitter
Considerations when making blockchain donations
If you’re donating in Ethereum for example, it is not worth donating small amounts, and even larger amounts, say $1000, would already arrive 10% or so lighter. Although there are fees when making SWIFT payments, they are not as large as those that can occur on the Ethereum blockchain.
In terms of direct donations to crypto addresses, there are no middlemen; but, when it comes to the murkier world of DAOs and NFTs, you are trusting a custodian to handle your money, meaning the source really needs to be trusted.
Where there is money, there will always be scams. In the world of crypto, people can easily be fooled by copycat projects, so unless you have really done your research, it can pay to stick to a trusted entity that you know.
This last point becomes an ethical question. In the world of blockchain, transactions can be more easily controlled, and looked over, which in terms of verification, is a great thing. Noting this, when it comes to the issue of control over how the donation is used, this could present problems, taking power away from the organizations that help coordinate funds (and best know how to use it), along with the people who eventually receive the funds.
This concern is highlighted in the argument of Pete Howson, Senior Lecturer in International Development at the University of Northumbria. He highlights one project, Humanity Token, which allows donors to restrict certain purchases. This puts someone, most likely removed from the true reality of the situation, in a position of power.
Looking beyond war
Going further than urgent humanitarian aid, we see countless projects that are trying to help solve serious global issues.
Appearing on the Frontiers in Blockchain website, Rebecca Mqamelo from Minerva University, (CA, USA) reported on what they claim to be the first randomized control trial on community currencies. Operating in Kenya, citizens of Nairobi received the equivalent of $30, reporting:
Results show that CIC transfers of $30 are associated with $93.51 increase in beneficiaries wallet balance, a $23.17 increase in monthly CIC income, a $16.30 increase in monthly CIC spending, a $6.31 increase in average trade size and a $28.43 increase in expenditure on food and water.
Red Cross also implemented a two-year program in Ethiopia and Kenya in November 2019, with Forbes citing the ability of blockchain projects to reach the unbanked and get funds to those who aren’t well served by traditional finance infrastructure.
Along with UBI projects, blockchains dealing with climate change are also popular. There are a large number of initiatives that come under the heading of regenerative finance (ReFi), that are aiming to contribute to emission reduction. Projects like Offsetera help businesses engage with carbon reduction, while Public Land Protocol is a DAO that helps tokenize land for the benefit of the public and the environment. Then there is Open Forest Protocol (OFP), a forestation initiative built on the carbon-neutral NEAR protocol. As INC4 is a NEAR guild, we have seen the development of OFP up close, and are extremely excited about its potential.
Crypto and blockchain as an instrument for global betterment
In The Journal of International Humanitarian Action, a report entitled Blockchain for humanitarian action and development aid considered this issue deeply, concluding the following:
Blockchain is already being used to fight corruption, improve land tenure and property rights, create secure digital identities, tackle gender inequality, and more. As such, these initiatives contribute to the agenda of the Sustainable Development Goals in innovative ways.
However, referring to discussions coming out of a workshop called Blockchain4SDGs, held by Groningen University, the report stresses that we have to make sure that we use blockchain when there is a distinct advantage to do so, not simply because of the hype. As we have seen in the blog post, there are some real cases where blockchain and crypto can be used to great effect in times of crisis, but there are also some things that we should look out for. The technology itself is just the start, but will not alone help solve some of the biggest challenges that we face in the modern world. This is down to the choices we make as a society, and the choices of our leaders.