Ukraine Receives Million Dollars in Crypto Donations After Airdrop Announcement

During Russia's invasion of Ukraine, the imposition of sanctions, and ensuing financial market upheaval, the involvement of cryptocurrencies such as bitcoin has been a hot topic. And it's raised three major concerns about how it's being utilised and what the future holds.

Can Cryptography be used to Circumvent Sanctions?

Russia has been slammed with a slew of economic sanctions in the aftermath of its invasion of Ukraine, aiming at cutting it off from the global financial system. The US has placed key Russian politicians and financial entities on a sanctions list that effectively prevents American companies from doing business with them. Meanwhile, the US, its European allies, and Canada have delisted important Russian banks from the SWIFT interbank messaging system, limiting their access to global financial markets.

The Russian currency has plummeted as a result of the sanctions.

This has sparked a debate about whether cryptocurrencies, particularly bitcoin, may be used by persons on sanction lists to get around the limits. This is due to the fact that bitcoin and other digital currencies are frequently decentralised, which means they are neither issued or managed by a central authority such as a central bank. When crypto is sent to other users, it bypasses the regular financial infrastructure.

However, there are a lot of obstacles to overcome.

First and foremost, blockchain, the technology that supports bitcoin, is a public activity ledger. As a result, it’s simple to keep track of money moving from one account to another. This makes it an ineffective weapon for evading sanctions.

“The largest fallacy about crypto is that it is untraceable and that it is largely utilised for criminal purposes,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC. Meanwhile, Russian billionaires and businesses are unable to relocate their funds due to a lack of liquidity.

“Because crypto liquidity is only a small part of the global currency market, moving big amounts of money using crypto is challenging,” Ayyar explained.

Exchanges of cryptocurrencies will likewise be on high alert.

Ukraine tweet

In recent news, there has been an announcement on Ukraine Receives Over $7M in Crypto Donations After Airdrop Announcement.

-According to on-chain data, Ukraine received over $7 million in cryptocurrency donations after the country announced an upcoming airdrop. Following the announcement on Wednesday, Ukraine received $1.1 million in ether (ETH), $6 million in DOT, and other cryptos. This would bring the total amount of cryptocurrency donations to the country to more than $40 million.

  • Over $33 million in cryptocurrency had been contributed to Ukraine’s war operations prior to the airdrop.
  • An airdrop is when a company sends out free tokens in exchange for a specific action. Typically, project developers distribute tokens as a means of increasing adoption.
  • The exact nature of Ukraine’s airdrop is unknown. Ukraine has stated that every Russian soldier who surrenders will be paid $48,000, and cryptocurrency could play a role in this.
Ukraine Donations

Impact on Blockchain Policy Due to the Russia-Ukraine War

Proponents of cryptocurrency frequently pitch the underlying blockchain as a tool to make transactions more efficient and traceable. One of the reasons is because, unlike regular financial transactions, there is no middleman to transmit the money.

However, many cryptocurrencies continue to be plagued by high transaction fees and sluggish transaction speeds. For things like payments, they haven’t experienced widespread adoption.

During the battle, though, Ukraine began to accept cryptocurrency donations to fund its military, among other things. According to Elliptic, a data analytics business, Ukraine has raised more than $50 million in cryptocurrency. Given the high expense of transferring money abroad, accepting gifts through standard banking methods may be challenging. It’s also possible that Ukraine will take a long time to get funds.

According to Garrick Hileman, a visiting fellow at the London School of Economics, cryptocurrencies have an advantage in this area. “If vital infrastructure is down or there are issues about how quickly things can move through the traditional banking system, you can still transact as long as you have access to the internet and a computing device.” “One of the promises of crypto has been this,” Hileman remarked. Because the transactions are recorded on a public ledger, you can see where the money you send goes and how it is used after it is received, according to Hileman.

He went on to say that “some of the original value propositions of cryptocurrencies are seeing validation.”

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