…but it won’t wreck Russian sanctions.

War is expensive. The United States spent about US$1.1 tn (£830bn) on the 2003 Iraq war in today’s money, while the Falklands war cost the UK the equivalent of about £2.6bn. 

Funding is therefore an important resource in any conflict, similar to that of artillery, fuel and boots on the ground. The burden of finance traditionally falls to governments, often in the form of issuing war bonds. Ukraine is currently issuing US$270m in war bonds for that very purpose. 

Interestingly, however, Ukraine is also drawing on options that were not available until very recently. Several days after the Russian invasion, Mykhailo Fedorov, Vice Prime Minister of Ukraine and Minister of Digital Transformation, called on people around the world to show solidarity with Ukraine by making crypto donations.

At the time of writing, donations have exceeded US$50m. This may not be in the same league as the value of the war bonds or the financial aid and military assistance being offered by governments around the world, but it’s not insignificant. It shows individuals collectively having a state-like impact on the global stage. 

This new way of accessing global private capital is a refreshingly welcome facet of cryptocurrencies. By going straight to the people of the world, Ukraine’s government has been able to raise finance quickly without the need for financial intermediaries. 

Yet as ever with cryptocurrencies, they bring benefits and risks in equal measures. They also have the potential to help Russians to evade the crashing rouble – contrary to demands by Ukraine. Mykhailo Fedorov, for example, pleaded on Twitter for, “all major crypto exchanges to block addresses of Russian users… It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users”.