Although the Taliban taking over the country of Afghanistan continues to make headlines even now, there is another aspect of the recent takeover that many would find surprising. This is, of course, in reference to the fact that the usage of cryptocurrencies within Afghanistan has been growing despite the presence of the group.
One of the biggest reasons for this surge has to do with Afghanistan’s new leaders not wanting anything to do with the traditional financial systems of the West, in which case cryptocurrencies would make a viable alternative. The fact that the country’s central bank had emptied out the vaults containing the hard currency reserves, which also coincided with both the local banks administering capital controls and the United States stopping shipments that contained new dollar bills, is all evidence of Afghanistan’s journey towards independence from the influence of the U.S.
Why crypto?
As the United States and other various Western governments continue to adopt an anti-Taliban mindset, wherein many money-service-based businesses and banks have been routinely cutting off any and all access regarding the traditional forms of finance for the Afghans. This has since resulted in both a need and desire for a viable alternative.
Cryptocurrencies are that alternative, and many of Afghanistan’s citizens now believe that these digital assets can be utilized for the purposes of storing funds and a way to transfer money without the involvement of intermediaries. This mindset has since resulted in Afghanistan entering the top 20 nations (out of 154) for crypto usage in this year’s Global Cryptocurrency Adoption Index. In 2020, the country was in the lowest-ranked category, a stark contrast from where it stands now.
Pros and cons
Some Afghans who had been early investors in crypto managed to successfully evacuate their friends and families around the time that the Taliban takeover was occurring. Moreover, the lack of a traditional financial infrastructure has now provided an opportunity for the crypto industry to make its presence felt in the country, as a sizable number of Afghans do not even have a bank account anymore.
Of course, there is also the risk of the Taliban using cryptocurrencies for undesirable purposes, such as money laundering and terrorism. The group may also use digital assets to try and circumvent the sanctions imposed by the West.
This is not the first time that cryptocurrencies have succeeded where traditional financial systems have failed, as other nations like Venezuela had utilized Dogecoin (DOGE) to buy various essential goods following the substantial decrease of its local currency.