Cryptocurrencies with the Help of DAOs Provide a Means to Support Ukraine’s Efforts
More than $22 million worth of cryptocurrencies has been sent in support of the Ukrainian war effort.
Bitcoin, ether, doge, and newly added polkadot, among other digital assets, have become more than an interesting side story to the war – the benefits and drawbacks of crypto are now being tested in a new environment and on the global stage.
Through the use of a blockchain decentralized autonomous organization (DAO), digital wallets believed to be controlled by the country’s authorities are building a literal war chest of crypto to fund the country’s defense. At the same time, the U.S. may be contemplating crypto sanctions against Russia. The DAO serves as a crypto repository and currently serves exclusively for the benefit of Ukraine.
What is a DAO?
A DAO exists on the blockchain for a specific purpose decided by its members. The members own the organization, and all decisions are made by the collective owners as to the purpose and use of the entity. There are various ways to participate in a DAO, usually through the ownership of a token. For example, crypto could be placed in the collective via the purchase of an NFT that demonstrates one is part of the collective.
DAOs operate using smart
contracts. This is code that automatically executes whenever a set of criteria are met. Smart contracts are now available on many blockchains after first being pioneered by Ethereum. The smart contracts establish the DAO’s rules. Those with a stake in a DAO then get voting rights and are influencers to how the organization operates by deciding on or creating new purposes.
DAOs are autonomous and transparent. Since they’re built on open-source blockchains, anyone can view their code. And as a level of safety, anyone can also audit their built-in treasury since the blockchain records all transactions.
Crypto on the Frontline
Twitter has become very powerful in helping to shape world events and provide mass communication where there might otherwise not be a means. So, it shouldn’t be a surprise that Ukraine’s official Twitter account has been sharing its digital wallet addresses so those interested would know how to send financial aid. In total, Ukraine’s government and other organizations have surpassed $22 million through more than 23,000 crypto donations since the start of the Russian invasion.
The funds are reportedly being used for uniforms, food, and artillery.
The U.S. is said to be weighing limits on Russia’s access to bitcoin and other cryptocurrencies as part of its next wave of sanctions, according to the Wall Street Journal. The possible crypto sanctions would likely target exchanges that violate bans against transacting with blacklisted Russian banks and potentially limit Russia’s ability to seek refuge in digital assets. Targeting the country’s access to these digital assets would take sanctions and crypto into uncharted territory. Actually blocking transactions would be challenging, since, by its nature, private digital currencies are designed to exist without borders and for the most part, outside the government-regulated financial system.
More traditional sanctions against Russia are said to be disrupting an already disrupted Russian economy and currency. Bitcoin trading volumes using the ruble and Ukraine’s hryvnia have surged to their highest level in months. This suggests bitcoin could be more attractive in those markets. Crypto exchanges are also being pulled into the conflict, with Ukraine asking them to block Russian customers’ accounts.
While benefits of digital currency are being showcased with the Russia/Ukraine war, currencies like bitcoin haven’t derived much price benefit. At current exchange rates, bitcoin has approximately $180 billion less in value compared to the beginning of the tensions. The longer-term impact has yet to be seen. Successful sanctions that may include crypto exchanges could hurt the long-term purpose of cryptocurrency. However, the ease at which banks and central banks are avoided while individuals and corporations transmit currency during times of crisis may highlight how critical it can be to financial safety.
Cryptocurrency is being donated to Ukraine to help their defense. The primary donation method has been through a blockchain-based DAO. A transfer of donated assets may not be as efficient or as certain to reach its intended recipient by any other method. Ukraine has been grateful and sends updates through its Twitter account.
Managing Editor, Channelchek
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