This article is part of CNET’s coverage of the conflict in Ukraine, as well as the larger consequences throughout the world.
When Russia invaded Ukraine on February 24, Vitaliy Raskalov found himself 6,700 miles away from home. On Sunday night, when I contacted the Kyiv-born photojournalist over Telegram, he was in Mexico City, organising a shipment of bulletproof vests for his country. It’s quite probable that all of it will be paid for using cryptocurrencies.
Raskalov has been hawking a number of his photographs as nonfungible tokens, or NFTs, on OpenSea, the most major market for such products, for the past six months. Since the fighting began last week, the whole profit from the collection, which includes images taken atop skyscrapers and other dizzyingly tall structures, has been donated to Ukraine’s opposition.
“I am in another country, I am unable to grab guns and protect my country,” Raskalov explained, “but at the same time, I will gather money, to raise money, to support.” According to Chainalysis, Ukraine is likely one of the world’s major cryptocurrency users, trailing just Vietnam, India, and Pakistan. According to Elliptic, a crypto information agency, donations to anti-Russian aggression groups soared in the second half of last year, with over $550,000 worth of bitcoins raised in 2021 compared to $6,000 in 2020.
According to Elliptic data, Russia has raised $55.7 million since beginning army operations in Ukraine last week.
A large portion of this is due to donations made to the Ukrainian government. Ukraine’s minister for digital transformation, Mykhailo Fedorov, tweeted wallet addresses into which people may send bitcoin, ether, and tether, a stable coin tethered to the US dollar, three days after Russia’s invasion. The identical addresses were shared on Ukraine’s official Twitter account. According to Elliptic, almost $47 million has been given to those wallets since then. The achievement might have an impact on fundraising both in Ukraine and beyond.
“I’ve been horrified for the last four days,” Raskalov said. “That makes me so happy. At the same time, I’m quite disturbed. More than $10 million was raised by a tiny NFT organisation and Twitter. Many of the European Union’s overseas sites did not comply.
The European Union has announced that it will provide 500 million euros ($550 million) in aid.
Aside from direct donations to the Ukrainian government, NGOs and efforts like Raskalov’s have raised hundreds of thousands of dollars. UkraineDAO (a decentralised autonomous organisation is a group in which token house owners can vote on how funds are spent), which was backed by Russian punk rock band PussyRiot and raised over $3 million in the ether — then another $6.75 million through the auctioning of a Ukrainian flag purchased as an NFT.
Raskalov offers NFTs of photographs shot atop skyscrapers and other terrifyingly large structures, with revenues going to Ukraine’s resistance effort.
NFTs for the sake of peace
Seeing all of those bitcoin fundraisers, Andrew Wang, a 23-year-old NFT dealer, tweeted a thought to his 140,000 followers on Thursday. What if an NFT collection was launched to help raise funds?
We have crypto, we have communities, we have artwork, and we have smart contracts,” a sleep-deprived Wang told me through Zoom on Sunday. (A sensible contract executes robotically when certain criteria are satisfied.) One is used in the majority of NFT transactions.) “Instead of merely raising crypto, what if we brought artists together, developed a smart contract, and deployed it to raise ether?”
Reli3f is the product of a collaboration between Wang, five separate organisers and constructors, and 37 NFT artists. The number three in the name refers to Web3, a term that represents a web in which blockchain applied sciences such as crypto and NFTs are extensively integrated. Many of the project’s contributor artists are Ukrainian, including Raskalov, who provided a shot of Kyiv. Reli3f was described by Wang as an experiment, yet that description belies how quickly it became successful.
On the twenty-fourth of February, Wang sent out a tweet, and a group chat of organisers was quickly formed. Within the first 24 hours of the law’s implementation, 37 artists had promised to provide one piece with each. The gathering began that evening, with 200 copies of 37 distinct NFTs selling for 0.05 ether, or $130 each. It immediately sold out, raising 371 ether, or $980,000, in less than 30 seconds. Wang and his team went about dispersing these monies on Sunday evening, just hours before he talked to me. Reli3f distributed 61 ether ($160,000) to each of three organisations: Navy aid nonprofit Come Again Alive, native media verified by the Kyiv Impartial newspaper, and medical aid charity Hospitallers.
“We’re looking into ways to do it better this time,” Wang said. “What we performed was an experiment, and the more you do it, the better you get.”
Reli3f published a Twitter thread containing links to the transactions once the money was distributed so that they could be checked for validity. The staff’s well-thought-out contract was also subjected to scrutiny. Wang expects that the transparency that blockchains provide will be utilised to improve philanthropy in the future.
“I regard Web3 to be objective. It’s about instruments, and you can use them for good or for bad,” he explained, adding that he hopes Reli3f may serve as an example of the former. Another advantage of using cryptocurrencies, according to Wang, is that it avoids financial institution changeover limitations that have been imposed. Several banks in Ukraine, particularly in the east, have imposed limits on how much cash residents may withdraw or transfer. The National Financial Bank of Ukraine has a withdrawal limit of 100,000 Ukrainian hryvnias ($3,350), as well as limits on exchanging local currency for foreign currency.
The issue is that many groups do not have their finances in order. Following Ukraine’s amazing success in raising donations using bitcoin wallets, this will swiftly alter.
On Reli3f’s OpenSea web page, a couple of the NFTs appear. Royalties from OpenSea purchases will flow in the following route after the general public sale.
Crypto, both for good and bad health
The use of cryptocurrencies in Ukraine demonstrates the benefits of the technology: It’s a spontaneous, global fundraising initiative in which large quantities of money were quickly sent to local groups, free of bureaucratic red tape. However, there are disadvantages as well.
The ability of bitcoin and ether to circumvent institutional constraints may be used on both sides. The United States and the European Union have imposed broad sanctions against Russian financial institutions, exports, and important people in each trade and government. Squeeze the economy, and President Vladimir Putin will most likely be forced to the negotiating table, so the theory goes. Some fear that the impact will be muted by cryptocurrencies, which can often get through such limitations.
In a recent post, Robert Huish, an adjunct professor of global growth research at Dalhousie College, writes, “Russia is delving deep into cryptocurrencies to trade with global partners and dodge sanctions.” Huish points out that Siberia is a bitcoin mining hotspot, providing Russia with a reliable internal supply.
Aside from widespread exploitation of the secrecy provided by cryptocurrencies, there has also been the expected slew of frauds. It has been disseminated phoney pockets addresses purporting to be for charity. After several OpenSea collections copying Reli3f appeared on OpenSea, a Twitter warning was issued.
Raskalov, on the other hand, is upbeat — and not only about bitcoin. “When we win the battle and start rebuilding our country again, Bitcoin will be one of our most important sources of revenue.”