In a time of economic turmoil, soaring prices, and a shortage of cash, some Afghans see cryptocurrencies as a reliable backup source of finance.
After helping 10 family members flee to Pakistan, 22-year-old Farhan Hotak did not leave the country. He returned, kept his small family safe and continued to do vlogs, reflecting the complicated situation in Afghanistan.
Hotak also keeps a close eye on his crypto portfolio on Binance. The crisis caused the afghani local currency to hit a record low, and most banks across the country closed, making cash withdrawals virtually impossible.
A crypto investor and vlogist, Farhan Hotak lives in a remote area of Afghanistan. Photo: CNBC.
“In Afghanistan, we don’t have platforms like PayPal, Venmo or Zelle, so I have to depend on other things,” Hotak told me. CNBC.
The Afghan economy mainly uses cash in transactions. So the coins in the crypto wallet won’t help Hotak order dinner, but he is assured that part of his fortune is protected against economic turmoil at home.
It also offers future opportunities, helping Hotak access the global economy from Afghanistan, weathering inflation. These are things Hotak never imagined before knowing about Bitcoin.
“I’m interested in the crypto world. I’ve made a lot and see great potential to help myself further,” Hotak said.
Crisis of the financial system
The past week has been a bad one for the Afghan economy. The financial system is stagnant, borders are closed, cash is short and devalued, and commodity prices skyrocket.
Many banks were forced to close after running out of money in their vaults. Photographs of hundreds of Afghans lined up outside banks waiting for their turn to withdraw their money have gone viral on the Internet, partly reflecting the current predicament.
“I’m in an area with two banks and three ATMs, but they’ve been off since August 12,” said Ali Latifi, a journalist living in Kabul, referring to the time before the Taliban entered the Afghan capital.
People line up outside a bank in Afghanistan on August 15. Photo: Getty Images.
Western Union has closed all services. Even the system of transferring money through traditional brokers “hawala” that has existed for hundreds of years in the Muslim world is now shut down.
Sangar Paykhar, a Dutch native of Kabul, has been in frequent contact with his relatives back home in recent weeks. At first, many people maintained their lifestyle by borrowing cash in advance and paying it back with wages, he said. But now this activity has ceased.
Lenders started hoarding cash. “They realize that the regime has collapsed, the borrowers may not be able to find a job tomorrow,” Paykhar explained.
Days before the Taliban entered Kabul, Musa Ramin was among those lining up outside banks, trying in vain to withdraw money. But unlike other Afghans, a few months earlier, Musa Ramin had invested part of his fortune in cryptocurrencies.
In the past, Ramin has seen fiat currencies plummeting in value, while decentralized digital currencies have proven to be a reliable hedge.
In 2020, during a short trip from London to Kabul, Ramin was stranded in Turkey. The quarantine period for Covid-19 has been extended from one week to six months.
“I converted all my money to lira,” he said. After the Turkish currency began to depreciate, Ramin’s assets were halved and he was forced to save. “That’s when I discovered Bitcoin.”
All flights canceled, unable to travel, Ramin overcomes this difficult time by trading in cryptocurrencies. “At first, I lost a lot of money,” Ramin said. But then he got to grips with managing his digital assets thanks to Twitter and YouTube tutorials.
Musa Ramin spent 6 months in quarantine in Turkey and knew about cryptocurrencies. Photo: CNBC.
After returning to Kabul, the 27-year-old focused entirely on cryptocurrency trading. 80% of Ramin’s capital is in the form of regular transactions, mainly in major currencies such as Bitcoin, Rthereum and Binance coin. The remaining 20% is accumulated for the future.
“The crypto I earn in a month is worth more than working in the construction industry for a whole year,” Ramin said. Still, he admits the industry is fraught with risks. “It’s easy to make money from coins, but keeping wealth is the hard part.”
Ramin is not the only Afghan with his future in crypto. According to Google Trends, searches for the keyword Bitcoin and cryptocurrencies surged in the country in July, before the Taliban took control.
However, in a country still largely dependent on cash transactions, not many people choose to deposit money at banks, e-wallets are even rarer.
Back to Hotak. Although an investor in cryptocurrencies, and seeing it as his opportunity in the future, Hotak still earns mainly from daily labor jobs such as making bricks, digging wells and running a tailor shop. clothes.
Hotak lives in a remote part of Afghanistan, where there are no ATMs or bank branches. He has to keep a lot of cash to cover living expenses.
Signs of a growing crypto economy
It is difficult to get an accurate view of the extent of cryptocurrency development in Afghanistan when most of the owners of this asset do not want to disclose.
Afghanistan remains a country heavily dependent on cash. Photo: Shutterstock.
“The crypto community in Afghanistan is very small. They really don’t want to see each other. Right now, people just want to stay hidden until everything is fine,” explained Hotak.
According to research from blockchain data company Chainalysis, the peer-to-peer (P2P) cryptocurrency exchange network model is very suitable in a country like Afghanistan. Hotak and its local coin holders are using Binance’s P2P exchange, which allows them to buy directly with users from around the world.
Board Global Crypto Acceptance Index 2021 by Chainalysis ranked Afghanistan 20th out of 154 countries assessed for overall cryptocurrency adoption. Particularly in terms of P2P (direct user-to-user) exchange transaction volume, Afghanistan rose to 7th place.
It was a sudden and unexpected change within 12 months. Last year, Chainalysis suggested that the presence of cryptocurrencies in Afghanistan is so small that the country does not feature in the 2020 rankings.
However, some experts believe that Chainalysis has underestimated the level of cryptocurrency adoption in Afghanistan.
“Unlike many other countries, sanctioned countries don’t have good and clear data about the P2P market. This is one of the factors that makes it harder to track transactions,” said Boaz Sobrado. , a financial technology data analyst based in London (UK).
The US hastily removed photos of Afghans on the Internet
In order to protect former employees and civilians from the risk of Taliban retaliation, many US agencies are aggressively deleting photos posted online that show the appearance of Afghans.