July 14, 2024

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In Afghanistan, cryptocurrencies provide a way out of the crisis

In Afghanistan, cryptocurrencies provide a way out of the crisis

In the heart of a market in Herat, Arizu Acremi took out his smartphone and exchanged his cryptocurrency for a bundle of banknotes. An unexpected way for this young Afghan woman to finance her family’s survival, in a country in the midst of economic sinking.

Arezzo, 19, is one of about 100 students who have received $200 — about 180 euros — a month in cryptocurrency since September in this city in western Afghanistan, thanks to a US NGO Code To Inspire.

This amount, which she converted at the exchange office into the Afghani, the local currency, is necessary to pay the rent and feed her family of six. Her mother, a government employee, has not worked since the Taliban banned most women from public office.

Since Islamic fundamentalists came to power in August, Afghanistan has experienced an economic collapse and unemployment rates have risen, particularly due to the massive liquidity crunch caused by the freezing of billions of foreign-owned assets.

But digital currencies and their decentralized architecture, which is not subject to international sanctions, are allowing a few young people to escape the recession. “He was really, really helpful,” smiles Arezzo. “It was very surprising to me to learn that it can be used in Afghanistan.

“This emergency solution allows Code To Inspire, an organization originally founded to teach computer programming to women in Herat, to directly assist its students despite international sanctions.

Because of the asset freeze, Afghan banks closed for several weeks after the Taliban returned to power and have had limited withdrawals since they reopened, creating long queues at ATMs. It is almost impossible to transfer money to Afghanistan, to prevent the money from falling into the hands of Islamists.

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Cryptocurrency transfers, which are operated outside the banking system using “blockchain” technology, a type of ledger notorious for being tamper-proof, enabled the NGO to circumvent these hurdles while ensuring that every donation was well received by the targeted young women, its founder said. Frishta Forough, told AFP.

“Cryptocurrency is a great way to get around all kinds of political and economic sanctions, but it is also a tool that can transform the lives of people living under an authoritarian regime,” said this American, whose parents fled Afghanistan in the 1980s.

To ensure the financial security of its students, the NGO avoids paying them in bitcoins, the most popular cryptocurrency whose price regularly plays a roller coaster. She prefers “BUSD”, a “stable currency” whose price supports the dollar. Ms. Frog summarizes: “The US dollar is a dollar.” Along with this humanitarian initiative, cryptocurrencies are gaining followers in Herat with the crisis, according to Hamidullah Taimuri.

At its exchange office, which accepts these decentralized currencies, the broker has seen an influx of new clients over the past six months, many of whom come regularly to transfer crypto assets sent by relatives from abroad to Afghanis with difficulty with authorizations.

“Since the Taliban rule, transfers (of cryptocurrencies) to and from abroad have increased by 80%,” he says. “Cryptocurrency is more appropriate,” adds the 26-year-old financier. Transfers are instant and commissions are much lower than using Western Union or Hawala, the over-the-counter money transfer system popular among Afghans.

In Kabul, Nur Ahmad Haider also embraced the force of circumstances. The young man, who began exporting saffron to the US, UK, Australia and Canada in early 2021, has secured 90% of his bitcoin orders since the regime change. “I avoid going into the messy process of bank transfers.

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Since August, it has really become the only option available, and the most practical for me,” he says. The emerging frenzy was noted by Chainalysis in its 2021 global rankings on cryptocurrency adoption, which ranked Afghanistan 20th out of 154 countries.

The country was previously among the last. “I don’t think this is just a response to the Taliban’s takeover of power,” said Kim Grauer, the company’s director of research. “This is also because we are at a time when there are more ways to trade cryptocurrency on your phone and more people understand what it is all about.

“While the momentum is building, the volume of trade remains very low, and will remain so due to the lack of internet access and the high level of illiteracy in Afghanistan, she recalls. More than 10 of the 38 million Afghans cannot read, according to the latest figures from UNESCO.

But for those who can venture into this universe, cryptocurrency is the lifeblood. Besides his studies, Ruholamin Haqshanas writes from Herat for India-based media, specializing in new technologies.

Since the emergence of the Taliban, his salary, paid entirely in stable currencies, has enabled him to withstand accelerating inflation and the free fall of the Afghani, which in January lost 35.6% of its value against the dollar in one year, according to the data. From the World Food Programme. “Stablecoins provide very good protection against currency loss,” judges the 22-year-old student, who now earns more than his doctor father.

The young man is also trying to speculate on some of the more volatile cryptocurrencies, thanks to the advice of a 13,000-member WhatsApp group in Herat. Student Parisa Rahamati also took home $600 in February, betting the price of decentralized currencies such as Ethereum and Avax.

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An unexpected income she shares with her mother, widowed and unemployed. “You have to be willing to take risks,” says the 22-year-old. “The coding is 50/50, you can double your bet or go down to zero.”