- Contrary to the popular narrative, cryptocurrency can do more good than harm amid Russia’s invasion of Ukraine.
- Cryptocurrency, especially in the form of charitable giving, is just one part of the value Web3 can provide to Ukraine.
- Ultimately, Web3, which uses a stack of technologies to enable peer-to-peer interactions without centralized platforms and intermediaries, offers a ray of hope for a better, safer world where innovation thrives.
Cryptocurrency is not merely some dark, surreptitious money laundering tool for Russian war criminals. Instead, it has proven to be an invaluable humanitarian tool.
Ukraine has received close to $100 million in crypto donations, according to Alex Bornyakov, Ukraine’s deputy minister of digital transformation, who notes President Zelensky’s support for crypto is a potential “economic breakthrough” for the country.
“Never before in history have we had an asset like [cryptocurrency],” Alex Gladstein, chief strategy officer at The Human Rights Foundation, told Computerworld. “It’s like gold. You can have your savings in something where you just have to memorize or write down on paper the private key, and that’s really powerful. I’ve interviewed lots of people from Argentina and Afghanistan who’ve left their country with their value because of the power of Bitcoin. It’s a tremendous humanitarian tool.”
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Crypto donations, which run on decentralized blockchains, eliminate the roughly 25% to 30% administrative overhead of charitable giving, putting all the money in the pockets of the charity recipients.
But Web3’s value to Ukraine goes well beyond cryptocurrency donations by providing permanent and fixed government records and documentation of war crimes.
Permanent and unalterable government records
Rebuilding a country requires permanent, salvageable and trustworthy records of land registries, titles, births and other official documents that help establish who owns and is entitled to what. This became crystal clear when Haiti, already one of the world’s poorest countries, had tremendous difficulty rebuilding after the devastating 2010 earthquake destroyed 60 years of the country’s archives.
Ukraine is one of the first countries to use blockchain for land registries and other government records. This technology will serve Ukrainians well when it comes time to rebuild.
Permanent and unalterable documentation of war crimes
Russian state agencies are experts at generating propaganda-ridden content that spreads quickly through social media. Over the last decade, national intelligence agencies have documented these disinformation campaigns extensively. Following its invasion of Ukraine, Russia is altering images and accounts of its reported war crimes — and more. A manipulated video shows President Zelensky asking Ukrainians to lay down their arms and surrender.
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It is essential to securely and permanently store immutable authenticated images and accounts of the Russian invasion of Ukraine. This material must then be stored in unalterable systems enabled through blockchain technology. Already these efforts are underway. Arweave, a startup vendor widely used for secure and persistent NFT storage, reports that, so far, there are 10 million images of the conflict within its system.
Ukraine’s forward thinking stands in stark contrast to Russia’s draconian, inhumane invasion
Ukraine is quite a progressive country, as evidenced in part by its thoughtful embrace of Web3 technology. The Ukrainian population ranks fourth in the Chainalysis 2021 Global Crypto Adoption Index, and it conducts around $150 million in daily volume of cryptocurrency transactions.
Ukraine is also ahead of most countries in terms of regulating digital assets. “We became one of the world’s first countries to take a comprehensive approach toward establishing a quality regulatory framework for the virtual asset market, in which the creation of state infrastructure is a key issue,” Bornyakov wrote in Fortune last October.
Lessons for U.S. Senators
Sen. Elizabeth Warren and the co-sponsors of the Digital Assets Sanctions Compliance Enhancement Act of 2022 must educate themselves on Web3 technology. They have much to learn from Ukraine, the country they are trying to protect. Sure, criminals will use any financial system to try and hide and launder money. But blockchain is a much more difficult system in which to conceal money than existing legacy financial systems.
“Transactions involving illicit addresses represented just 0.15% of cryptocurrency transaction volume in 2021,” according to the Chainalysis 2022 Crypto Crime Report Introduction, which notes these transactions represent some $14 billion in value. Meanwhile, money laundering statistics from the United Nations show that about 2% to 5% — or $800 billion to $2 trillion — is laundered globally each year.
The Russian invasion of Ukraine has terrorized freedom-loving people everywhere as we watch in horror what is transpiring. Web3 won’t stop the missiles, but it does offer a ray of hope for a better, safer world where innovation thrives.
This story was originally published on the Gartner Blog Network.
Clients can access Gartner's full suite of resources for navigating the Russian invasion of Ukraine here.