Ukraine to mint NFTs to support war effort

The nation’s minister for digital transformation abruptly cancelled an ‘airdrop’ after raising more than $40m and has instead revealed plans for a new set of non-fungible tokens.

A protester with a Ukrainian flag demonstrates outside the United Nations headquarters in New York. Picture: Timothy A. Clary/AFP

Ukraine has abruptly cancelled a much-anticipated crypto ‘airdrop’ and will instead become one of the first developed countries to issues its own collection of non-fungible tokens, or NFTs, after it raised more than $US30m ($41m) in donations to support the country’s armed forces in their war against Russia.

Ukraine’s Minister digital transformation, Mykhailo Fedorov, announced in a tweet on Friday that his government would enter the much-hyped world of NFTs, and would reveal more details soon.

“After careful consideration we decided to cancel airdrop,” Mr Fedorov posted from his verified Twitter account on Friday.

“Instead, we will announce NFTs to support Ukrainian Armed Forces soon. We DO NOT HAVE any plans to issue any fungible tokens.”

After careful consideration we decided to cancel airdrop. Every day there are more and more people willing to help Ukraine to fight back the agression. Instead, we will announce NFTs to support Ukrainian Armed Forces soon. We DO NOT HAVE any plans to issue any fungible tokens

— Mykhailo Fedorov (@FedorovMykhailo) March 3, 2022

Ukraine’s government had previously announced plans for an airdrop – a free transfer of a digital asset generally associated with hyping up crypto businesses – to reward donors but Mr Fedorov cancelled those plans to mint NFTs. It is not clear if those NFTs will be free for donors or be sold in an effort to raise more funds.

An NFT is anything digital, including a drawing, piece of music or other art, with data stored on a decentralised ‘blockchain’. When an NFT is “minted”, a record of proof of ownership and provenance is made on a blockchain, effectively acting as a digital certificate of authenticity that can be easily verified by anyone anywhere in the world.

It's probably just me but I don't like the Ukraine airdrop idea.

May or may not be missing the point but this is how I feel right now.

A donation should simply be a donation. I don't think donors need a financial reward.

We don't need to monetize everything in crypto/web3.

— aceofafrica.eth (@AceOfAfrica) March 2, 2022

The move came after widespread confusion caused by crypto scammers, who impersonated Ukraine officials with an fake token called ‘WORLD’, leading cryptocurrency publication Coindesk to write an article that it was the official Ukraine airdrop. The WORLD token was made to look like it was issued from Ukraine’s official public Ethereum address, but it was instead issued by a third party.

Coindesk later issued a correction, but only after investors had poured tens of thousands of dollars into the fake cryptocurrency.

The sheer amount of cryptocurrency donations flowing through to support Ukraine combined with Russia‘s increasing financial isolation have heightened the spotlight on the global role of cryptocurrency, and sent prices higher.

Some analysts say however that bitcoin is now not likely to pass its all-time highs of $US68,990. It last traded at $US41,388, down 5.5 per cent in the last 24-hours.

“Bitcoin’s rally is starting to show signs of exhaustion,” OANDA Americas Senior Market Analyst Edward Moya told Coindesk.

Some NFTs have sold for hundreds of thousands of dollars. (Photo by Justin TALLIS / AFP)

“Bitcoin needs risk appetite to be healthy for prices to make a run above the $US50,000 level, so it should come as no surprise if prices consolidate around the $US40,000 level.”

According to a report in the South China Morning Post meanwhile, the sanctions imposed on Russia could open the door for China to accelerate plans for its digital yuan.

“Western sanctions imposed on Russia following the invasion of Ukraine, including exclusion from the SWIFT financial messaging system, could offer new development opportunities for China’s digital currency and its homegrown yuan cross-border payment system,” one analyst wrote.

“It is necessary and urgent to vigorously promote yuan internationalisation, especially the development of the CIPS system (Cross-Border Interbank Payment System set up to boost international use of China’s currency in trade settlements) and the digital yuan.”