Finance

Ethereum’s creator is sending funds to India to combat Covid-19

Vitalik Buterin, co-creator of the crypto network Ethereum, donated more than $1bn on 12 May to a relief fund to combat the spread of Covid-19 in India.

At least, it was $1bn when he made the donation — in a cryptocurrency that few had heard of and whose value plunged right after news of the donation spread.

In more conventional terms, the donation would rank among the philanthropy’s biggest strokes. But little is conventional: The currency, Shiba Inu coin, has been around for less than a year, and is one of a bevy of alternative cryptocurrencies that have exploded in popularity and price in recent months. Its value changes wildly by the hour. Unlike with cash, or even bitcoin, it is hard to use Shiba Inu coin to buy things.

The most prominent alt-coin is dogecoin, created as a joke in the fad for bitcoin doppelgängers. Shiba Inu is a joke on a joke, named for the dog breed that is the dogecoin’s mascot.

The donation surfaced in publicly available transaction records, which show that an account associated with Buterin sent some 50.7 trillion Shiba Inu coin to an account associated with the India Covid-Crypto Relief Fund. The transfer originated from an account that Buterin, in a 2018 post on his verified Twitter account, said was his.

He also sent the same fund $2m of ether, the in-house currency of the Ethereum network, according to transaction records.

Buterin couldn’t immediately be reached for comment. Punit Agarwal, who manages the volunteer-run fund, said it received the ether and Shiba Inu coins from Buterin. The India fund appears from its Twitter presence to have been set up in recent weeks.

The transfer was equivalent to about $1bn at the time Buterin made it, multiplying the price of the coin on an exchange by the 50.7 trillion coins he sent. But memecoin prices are exceptionally volatile, and few are traded in sufficient quantity to absorb a giant sale should someone want to turn coins into spendable currencies.

Indeed, the transfer drove the price of the Shiba Inu token down by about 35%, according to data on Uniswap, a “DeFi” platform on which it trades.

Agarwal said the fund would work through a company it set up in the United Arab Emirates to convert the coins using FV Bank.

Those funds will be donated to Indian nonprofits that are approved to receive money from overseas donors. They will also be used to send oxygen cylinders and other supplies to Indian hospitals, he said. Before Buterin’s donation on 12 May, the fund had received about $6.5m.

The token, whose ticker symbol is SHIB, appears to trade on only a few exchanges, most prominently Uniswap. Its creators designed the coin to be cheaper than dogecoin. As of May 10, the total supply of Shiba Inu was one quadrillion, according to the cryptocurrency exchange Binance.

Buterin came into his Shiba Inu holding in a fairly unorthodox manner. The coin’s creators gave it to him, sending half the supply they created to a wallet controlled by Buterin.

Buterin, 27 years old, was an early bitcoin acolyte. In 2013, he conceived of the Ethereum network as a bitcoin-inspired platform for hosting apps. Funds were raised in 2014, and the platform launched in 2015.

Activity on the Ethereum network has exploded this year on the back of two trends that rely upon it: NFTs, or nonfungible tokens, and “DeFi,” short for decentralised finance. The price of ether, the in-house currency on the network, has jumped from about $200 a year ago to more than $4,000 this month.

Write to Caitlin Ostroff at [email protected] and Paul Vigna at [email protected]

This article was published by Dow Jones NEWSPLUS

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