Cryptocurrencies give some relief to an Afghanistan in crisis

In the middle of a bazaar in western Afghanistan, Arezo Akrimi pulls out his phone and, after several taps on the screen, exchanges some crypto for a wad of bills.

The 19-year-old is one of hundreds of students from Herat who have received about $200 a month in cryptocurrencies since September thanks to the American NGO Code to Inspire.

This amount, which he converts into Afghanis at an exchange office, is crucial to paying his rent and feeding his family of six.

Since the return of the Taliban in August, the Afghan economy has collapsed due to the freezing of billions of dollars of assets abroad and the drop in international aid.

Digital currencies and their decentralized architectureimmune to international sanctions, pallow some young Afghans to avoid the worst of the crisis.

“It was very surprising to learn that this could be used in Afghanistan,” Arezo tells AFP. “It’s been really helpful,” he adds.

Code to Inspire was founded to teach computer programming to women in Herat, but its technological approach now allows its students to receive funding in this underprivileged country.

It is currently almost impossible to make bank transfers to Afghanistan to prevent funds from falling into the hands of fundamentalist Islamists.

And for people who have money in the bank it is difficult to get it out: cash withdrawals are limited to the equivalent of $200 per week for individuals and $2,000 for businesses. And customers must queue for hours for these transactions.

Cryptocurrency transfers allow the NGO to get around these obstacles and ensure that each donation reaches those who need it most, its founder Fereshteh Forough tells AFP.

“Cryptocurrency is an incredible way to overcome all kinds of political and economic sanctions, but also a tool that can change the lives of people in an authoritarian regime”explains the American, whose parents fled Afghanistan in the 1980s.

To guarantee the financial security of its students, the NGO avoids paying them in bitcoins, the best-known cryptocurrency but with a very fluctuating price.

Instead, it uses BUSD, a currency whose price is pegged to the dollar. “A BUSD is a dollar”Forough says.

Speed ​​and low commissions

Beyond this humanitarian initiative, cryptocurrencies are gaining ground in Herat, says currency trader Hamidullah Temori.

There has been a flood of new customers in the last six months, many of whom are converting cryptocurrency sent by relatives abroad to Afghanis.

“Since the Taliban came to power, transfers (in cryptocurrencies) to and from abroad have increased by 80%”he tells AFP.

Transfers are instant and fees are much lower than Western Union or “hawala,” the informal system traditionally used by Afghans.

In Kabul, Noor Ahmad Haidar has entered this world forced by circumstances. The young man, who started exporting saffron to the United States, United Kingdom, Australia and Canada at the beginning of 2021, now charges 90% of his orders in bitcoins.

“I avoid going through the chaotic process of bank transfers,” he explains. “Since August, it has become the only available and most convenient way for me.”

Its growing popularity in Afghanistan was noted by Chainalysis in its global cryptocurrency adoption index, which ranked the country 20th out of 154 in terms of social acceptance.

“I don’t think it’s just a response to the Taliban takeover,” says Kim Grauer, director of this research firm. “It’s also because we’re at a time where there are more solutions that allow you to trade cryptocurrency with your phone and more people understand what it is.”

Even so, the volume of trade is still very low and will continue to be so due to poor internet access and illiteracy in the field, he says.

“Crypto is 50/50″

For those who can enter, this world can be a lifeboat.

In addition to his studies, Ruholamin Haqshanas writes from Herat for Indian media specialized in new technologies. He receives his salary in “stablecoins”, cryptocurrencies that are not very volatile, which has allowed him to withstand galloping inflation and the fall of the Afghan.

“The ‘stablecoins’ offer a very good protection against the loss of value of the currency”, says the 22-year-old student, who now earns more than his doctor father.

Haqshanas also invests in more volatile currencies, on the advice of a WhatsApp group with 13,000 members in Herat.

Parisa Rahamati, also a student, earned $600 in February speculating with cryptocurrencies such as Ethereum or Avax, money from heaven that she shared with her widowed and unemployed mother.

“You have to be willing to take risks,” says the 22-year-old. “Crypto is 50/50… You can either double down or go to zero.” (I)