I vividly remember the day when all the banks operating in my country were cursed. My friend and I were on a desperate trip from one bank to another, trying to figure out a way to get paid online. The day before, we made a decision: We wanted to become independent.
I know the geography of Afghanistan very well. It is a landlocked mountainous country, full of bare rocky hills that crisscross all over the land. The mountains extend in all directions, creating wonderful valleys while making it difficult to penetrate into different areas.
But the world has evolved, countless new technologies have appeared, and people have even found their way into space. However, banks in Afghanistan have a strict set of obligations that more than 90% of the population cannot meet.
In order to open an account, banks require proof of income, house deed, and some other documents that most adults (not to mention young adults) cannot provide. Even if one manages to open an account, the banks here are largely restricted in terms of services – PayPal, Venmo, Wise and other payment solutions do not support Afghanistan.
When I learned this, I was even more disappointed and frustrated. I couldn’t give up all my dreams easily. I decided to continue researching, and in the meantime, I started my career as a freelance writer.
Within two weeks, I got my first client, a nice guy from India. When he found out I was from Afghanistan, he asked me if I was interested in getting paid in bitcoin.
It was a watershed moment for me. Bitcoin, a decentralized, permissionless and borderless asset. It was everything I could ask for. When I was learning Bitcoin, I found myself obsessed with it. You are introduced to the ecosystem of decentralized finance and the massive world of digital assets. I decided to work in the industry.
Thanks to the crypto blessing, I found new friends from all over the world. Even though we live in different jurisdictions, we all shared one common goal: we wanted to be able to communicate and interact without the meaningless boundaries and regulations set by the governing authorities.
Doomed to fail
Even before getting to know Bitcoin, I somehow knew that the old finance prevalent here was fundamentally flawed. Primarily, Afghanistan is overly dependent on US dollars.
This is mainly because Afghanistan imports more than it exports, something rooted in decades of wars and conflicts that have devastated even small developments that could have contributed to the growth of domestic production.
With no sources of sustainable growth, Afghanistan has relied heavily on the US dollar to defend its currency. Reports reveal that planeloads of US dollars were regularly landing in Kabul, sometimes on a weekly basis.
International aid grants have also played a major role in financing Afghanistan’s spending. According to the World Bank, US-led international aid grants have funded about 75% of the country’s public spending.
The Afghan economy was already suffering from lockdown measures in the wake of the COVID-19 pandemic, decades of war and the onset of drought, only to be exacerbated by upcoming events fueled by Taliban control.
Crisis to disaster
The already deteriorating Afghan economy plummeted after the lightning-fast Taliban seized power. With a severe shortage of liquidity, currency devaluation and rapidly rising commodity prices, recent events have set a worst-case scenario for everyone who lives here.
Dozens of my friends, doctors, university teachers, and employees of the collapsed government have been affected. While some now earn a tenth of what they used to earn, the majority are not even so lucky. The situation in the private sector is no better, with business halted due to lack of liquidity.
The backlash from the United States and global financial bodies has exacerbated my country’s fragile economy.
The United States announced that it has frozen more than $9 billion in the country’s central bank assets. This prompted US banks to be more cautious when dealing with their Afghan counterparts.
Later, Western Union and MoneyGram International, two of the world’s largest money transfer companies, suspended their services in Afghanistan. And since remittances from abroad by family members make up 4% of Afghanistan’s GDP, the equivalent of $800 million annually, this suspension will further exacerbate the crisis.
The International Monetary Fund blocked Afghanistan’s access to its reserves, and suspended more than $450 million in funds that were due to arrive on August 23, 2021.
All of this would create uncertainty and undermine confidence among Afghans, and cause people to convert their local currencies into US dollars. When local banks and exchanges refuse to convert due to a lack of liquidity, people will rush to exchange their currencies for goods – driving up their prices.
Without immediate action, there is a risk of a collapse of the Afghani currency, which could be followed by a financial crisis that could inflict more long-term pain on the people of Afghanistan – and beyond.
As a short-term remedy, the Taliban could get an infusion of cash to defend the local currency – a huge challenge given that the group is recognized as a terrorist organization by most of the world. The Taliban have posed many challenges to the people of Afghanistan. Women could no longer keep their jobs – they were required to stay home temporarily. Although no one knows how long this “temporary” measure will last. Women are also strongly advised not to leave their homes without the supervision of a male relative. Just like our personal freedom, our economic freedom is rapidly disappearing, as many predict that we are on the verge of total economic collapse. Fortunately, advances in technology have offered us an alternative.
Cryptography: a small window to freedom
Digital assets, while not a guarantee of freedom, can help to obtain a certain level of freedom. They can be useful in bypassing oppressive power structures by giving users 24/7 access to funds without permission.
With old funding in Afghanistan on the verge of collapse, we are already feeling a void in another system. Sure, Bitcoin can’t fix Afghanistan, but it does suggest an alternative financial system for every Afghan man and woman who has been cut off from the world.
Since the Taliban seized power on August 15, 2021, all local banks and stock exchanges across the country have been closed. People queued in front of the banks, hoping to withdraw their money at this very urgent time. However, it is not clear when the banks will open again and whether they will have sufficient resources to pay all depositors.
In this time of great turmoil, Afghan crypto users have been the least affected. I, for example, was able to carry on with my financial activities normally as if nothing had changed. With nearly 100% of my wallet in crypto, inflation is the last thing I have to worry about.
This is also true for other Afghan crypto users. Unaffected by the recent price hike and depreciation of the Afghani currency, many Afghan cryptocurrency investors and traders remain, as bitcoin has remained a sure inflation hedge – a guiding light in the dark reality of our economic situation.
There is another vital role for cryptocurrencies within Afghanistan. With more than 200,000 Afghans displaced internally and more than 100,000 leaving their country with little more than clothes, non-profit organizations are pointing to cryptocurrencies as the most efficient way to make donations now that money transfer giants have halted their services in the country.
And while women currently cannot return to their jobs — jobs they previously held for years — they also have access to digital assets. Such networks do not discriminate like the Taliban. Instead, it enables. It enables women to obtain an alternative means of economic freedom – even when the Taliban causes just the opposite.
Cryptography can play a constructive role in the lives of many. It could literally save lives. The tragedy of Afghanistan has proven that.
I don’t know how we can fix Afghanistan. But I know coding helps. It provides us with a slice of an important human element that we don’t have otherwise: economic freedom.
I am living proof.
This is a guest post by Noor. The opinions expressed are their own and do not necessarily reflect the opinions of BTC, Inc. or Bitcoin Magazine.