The war in Ukraine is the first cryptocurrency-financed conflict

 

The war in Ukraine is the first cryptocurrency-financed conflict

The war between Russia and Ukraine is financed with cryptocurrencies. According to observers, this is the first major conflict in history that takes place in the era of virtual money - writes Intelnews

Crowdfunding-funded conflicts are not a new phenomenon. Israel is believed to have raised $ 50 million from individual donors around the world in the years after its founding. for the needs of the army. In the 1970s, militant groups such as the Irish Republican Army obtained steady streams of donations from expatriate communities. The difference in this war is the ubiquity of the Internet and cryptocurrencies, which have become "the next front" in the rapidly escalating conflict in Ukraine.

Australian Broadcasting Corporation scientific correspondent James Purtill, referred to by Intelnews, points out that some aspects of the war are increasingly influenced by decentralized autonomous organizations (DAOs). DAOs are member-owned online communities that engage in crowdfunding activities outside of any government-imposed regulatory framework. They are not managed by boards of directors, but they keep records of financial transactions on the blockchain. Therefore, they operate in a gray legal zone, which is facilitated by the use of cryptocurrencies in financial transactions.

See also: Time for a blow to cryptocurrencies?

Purtill notes that in recent years the administration of Ukrainian President Volodymyr Zelensky had aspirations to become the most cryptocurrency-friendly country in the world. So it came as no surprise when just minutes after the start of the Russian invasion of Ukraine, the government in Kyiv launched an official cryptocurrency fund called the Crypto Fund of Ukraine. By Monday, they fundraised over $ 22 million. and continues to grow exponentially. The donations are used to equip the Ukrainian army and volunteer militia.

There are concerns among experts that the Russian government, as well as individual pro-Kremlin oligarchs, may resort to using cryptocurrencies to avoid international sanctions. The use of cryptocurrencies could allow Moscow to overcome the consequences of excluding it from SWIFT, the global standard for safe financial transactions. Last weekend, Kyiv issued a call to the world's largest cryptocurrency exchanges to block Russian clients, including the Russian government, from carrying out transactions. However, experts point out that due to the decentralized nature of blockchain, it is extremely difficult to prevent specific users - including governments - from trading on it.