Bitcoin-wise Ukraine protesters tap digital money’s global reach

Bloomberg

Ukrainian activists are turning to bitcoins to fund a three-month protest in Kiev’s Independence Square that helped oust President Viktor Yanukovych amid violence that left at least 82 people dead.

Photos of demonstrators on the barricades with signs seeking donations in the digital currency circulated on the Internet. In one such image posted on CoinDesk.com, a young woman working on the food line holds a paper with “Support the Revolution” in English over the background of Ukraine’s blue- and-yellow national flag.

The signs include a QR code, a pixelated square that can be read by a smartphone’s camera to link to a bitcoin address. Donations over three such accounts totaled about $15,600 worth of the digital currency, according to data on Blockchain.info. That’s almost four years of average earnings in a country where average monthly income is 3,619 hryvnia ($338), according to the statistics office.

Bitcoin holders are showing support for the Eastern European nation at a time when the virtual currency is undergoing its own crisis. The shutdown of Tokyo-based Mt. Gox exchange prompted speculation customers lost more than $390 million, attracting probes by regulators in Japan and the U.S.

Mt. Gox, which had the largest market share of all virtual currency exchanges as recently as April 2013, went offline Tuesday after halting customers’ bitcoin withdrawals on Feb. 7. A document posted on the Internet labeled “Crisis Strategy Draft” said Mt. Gox had lost 744,408 bitcoins as a result of theft that “went unnoticed for several years.”

The digital currency, introduced in 2008 by a programmer or group of programmers using the name Satoshi Nakamoto, has no central issuing authority and uses a public ledger to verify transactions while preserving users’ anonymity. While the amount and time of every payment to the protesters’ account are visible, the identity of the recipients and senders is not readily available.

The built-in anonymity has led to concern the digital currency may be used for money-laundering and illicit sales, prompting authorities in Russia, China and Israel to seek restrictions. It also sparked a debate on bitcoin forums about who actually receives the donations and how they are used, with some posters claiming the images have been digitally altered.

Deposed Ukrainian President Yanukovych, who has said he was removed in a coup, was scheduled to hold a press conference Friday in neighboring Russia. An interim Ukrainian government is working on securing international financing to avert a default while tensions continue to flare in the southern Crimea region.

Bitcoin’s price was $567.59 at 3:44 p.m. Tokyo time, according to the CoinDesk Bitcoin Price Index. It slumped as low as $418.78 on Feb. 25, and was as high as $1,151 on Dec. 4. Ukraine’s hryvnia, which is managed by the central bank, weakened 5.1 percent to 10.7000 per dollar Thursday, extending its drop this year to 23 percent.