“Cryptocurrencies will play a huge role in Afghanistan […] in the war for and against Taliban forces.” So says Cardano founder Charles Hoskinson. He is convinced that cryptocurrencies will become an important store of value and allow for financial privacy among Afghans. Especially given the recent withdrawal of
U.S. forces from the country and the Taliban insurgencySponsoredSince then,
Taliban forces have been scrutinizing citizens’ every move, including their finances and social media activity. Hoskinson said
Wednesday in an interview with CNBC:
Afghans’ digital lives are now under scrutiny. The last two decades have been scrutinized by a regime that if you express your opinion in a way that doesn’t fit their regressive views, they now threaten you with persecution, imprisonment and even death.
Hoskinson didn’t give too many specifics on how digital currencies will benefit the Afghan community. However, using privacy-protecting blockchain technology could protect them from Taliban surveillance of their personal finances.
Cryptocurrencies will help redeem Afghanistan
Additionally, digital assets could protect this heavily cash-dependent nation from inflation. According to
some financial analysts, the emergence of a hyperinflationary crisis in Afghanistan is very likely. Among the many reasons is the disruption of financial markets and payment mechanisms after the Taliban took power. Analysts cite “the death, imprisonment or withdrawal into hiding of a significant portion of the population, or if there is a wholesale withdrawal of women from the workforce” as reasons for such a turn of events.
Already, the country’s currency, the Afghan afghan (AFN), is experiencing wild price turbulence. Moreover, local bank accounts have been frozen at the behest of international aid organisations and the US. Last week, Western Union also suspended its services in the country until further notice. The overall effect of all these actions is to restrict Afghan citizens from transferring their assets internationally. Western Union said in a statement:
Western Union understands the urgent need that people have for funds, and we are committed to resuming operations for our customers in Afghanistan when conditions permit,
Increased cryptocurrency adoption in Afghanistan
Many nonprofit organizations have begun accepting donations in cryptocurrencies. These include Hearts & Homes for Refugees and Code to Inspire. This has helped Afghans meet basic needs such as education and medical assistance.
Besides, the adoption of cryptocurrencies in Afghanistan has increased in recent years. According to Chainalysis 2021 Global Crypto Adoption Index, the country is currently ranked 20th. Other developing countries such as Venezuela, Pakistan, Vietnam, and the Philippines are also high in the ranking. This suggests that countries with weak financial infrastructure see digital assets as an important alternative to their failing national currencies.
Nevertheless, Hoskinson also believes that the Taliban could also embrace digital assets. Cryptocurrencies could be used to fund their operations at home or to raise funds from external sources.
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