Crypto can alleviate the financial fallout for people in Afghanistan
As the political system collapses, so too does the financial one. Thus, more and more Afghan citizens will turn to crypto.
“One of the greatest tragedies in life,” according to author K. L. Toth, “is to lose your own sense of self and accept the version of you that is expected by everyone else.” For the people of Afghanistan — almost 40 million of them — the loss of self, as well as the loss of life, has become a brutal reality. With the Taliban in control, chaos now reigns supreme. As businesses shut down, tens of thousands of people are desperately trying to flee the country. Moreover, as the political system collapses, so too does the financial one.
As CNBC’s MacKenzie Sigalos recently noted, Afghanistan is “a country running on legacy financial rails.” This painful reckoning, 20 years in the making, has resulted in a “nationwide cash shortage,” as well as “closed borders, a plunging currency, and rapidly rising prices of basic goods.” The people are desperate as the country quickly descends into the deepest depths of despair.
According to Sigalos, many of the country’s banks, obviously affected by the country’s swift demise, have been “forced to shutter their doors after running out of cash.” To make matters even worse, Western Union has suspended its services. As Sigalos writes, “even the centuries-old ‘hawala’ system — which facilitates cross-border transactions,” has been closed. The desperation is palpable. The people of Afghanistan require assistance.
Thankfully, grassroots nonprofits are doing their best to offer assistance. They are currently assisting some 20,000 Afghan citizens “still in the country waiting for United State authorities to process special immigrant visas.” This is where the importance of cryptocurrencies comes into play. To raise enough funds to relocate Afghan families, nonprofits are currently accepting Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Zcash (ZEC), Gemini dollar (GUSD), Balancer’s BAL, Yearn.finance’s YFI, Polygon’s MATIC, Synthetix Network Token (SNX) and Bancor Network Token (BNT).
For the critics of crypto, many of whom have questioned if it serves any purpose, the events in Afghanistan demonstrate how it can quite literally save lives. This might sound hyperbolic — but it’s not. Besides nonprofits, more and more Afghan citizens are turning to crypto. In the CNBC article, Sigalos spoke with a young Afghan who believes that “a Venezuela-type situation” is on the horizon. It may very well be. According to a Bloomberg report, as the Taliban seized control of Kabul in mid-August, the Afghan afghani — the country’s currency — dropped to an all-time low.
Venezuela may provide a telling blueprint for Afghanistan’s future. The South American country — ravaged by hyperinflation, political instability and United States sanctions — is in a dire state. With the country in the grip of an economic crisis, cryptocurrencies like Bitcoin and Ether have shown their worth. According to Venezuela-based cryptocurrency consultant and Cointelegraph en Español contributor Jhonnatan Morales: “Many people are mining and trading Bitcoin not to acquire products, but to protect themselves from hyperinflation.”
Related: Exploring Venezuela’s crypto ecosystem since the start of the pandemic
Speaking of Venezuela, the nation’s government recently announced plans to remove six zeros from the bolivar. One needn’t be an economist to recognize that the Venezuelan government is doing everything in its power to save a currency that has been in a hyperinflation coma for years. Could the same fate await Afghanistan? If a government isn’t formed soon, don’t bet against it.
In Afghanistan, as the Taliban scramble to impose some political order, cryptocurrencies are also offering Afghans hope. In fact, across this region — in places like Lebanon and Palestine — cryptocurrencies are very much in demand. An increasing number of people from Lebanon and Palestine, all too familiar with depreciating currencies and political instability, are finding solace in crypto. According to Arabian Business, as the Lebanese pound “continues its downward plummet and the economic situation worsens,” people are turning to crypto, both as an investment and as a means of transferring their funds abroad. Furthermore, according to the report, a “growing number of local small businesses, ranging from grocery stores to fashion boutiques,” are accepting payment in Bitcoin.
Related: Why Pakistan and the Middle East can bet on crypto mining
Again, for those who are quick to question why cryptocurrencies are necessary, Lebanon provides more than a few answers. Since 2019, the Lebanese pound has lost around 90% of its value. The political analyst and journalist Marwan Bishara, who has written extensively on the demise of Lebanon, told readers that the Lebanese people have become accustomed to the “shawarma paradox”: Two years ago, “the national sandwich” cost 5,000 Lebanese pounds, or about $2; today, it is priced at 20,000 pounds, less than $1. This may seem darkly humorous, but there is little humor in the demise of the nation’s currency, which is essentially worthless.
Some 120 miles away in Palestine, the independent state’s monetary authority is currently debating whether or not to issue a digital currency of its own. As Palestine seeks to gain further independence from Israeli rule, a digital currency would at least offer it a form of monetary independence. With so many uninformed commentators fixated on the bad actors who use crypto, too few focus on the desperate people who use it to survive. This brings us back to Afghanistan, a volatile place plagued by acts of terrorism and political instability. The future of the country is uncertain, but cryptocurrencies are offering a lifeline to the millions of Afghans whose lives are very much on the line.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
