Bitcoin and other cryptocurrencies are seeing their adoption rates in Afghanistan climb higher amid the ongoing Taliban takeover. CNBC’s Mackenzie Sigalos explained the trend in an exclusive story this weekend, which documented the journey of many Afghans towards crypto literacy and how the asset class is helping them fight a countrywide cash shortage.
Ever since the Taliban took control of major cities in Afghanistan, citizens have been struggling to get access to the most basic banking facilities.
With no authority left to govern the central bank, the economy is also facing a severe shortfall of new currency notes. Additionally, money transfer companies like Western Union have suspended all their services, and the age-old “Hawala” system -- which facilitates informal transferring of funds -- is defunct at the moment.
Under these circumstances, cryptocurrencies are the only viable form of payment. They’re also an ideal hedge against inflation as the national currency tanks further.
“If a government isn’t formed quickly, we might see a Venezuela-type situation here,” said Musa Ramin, a crypto adopter who plans on doubling down on digital assets in the next year to as much as 40% of his net worth.
Ramin is not alone in his enthusiasm for cryptocurrencies. Google trends data shows that the words “crypto” and “bitcoin” became popular in July before Kabul went into the Taliban’s hands.
That being said, Afghanistan’s crypto community had been growing even before this crisis. According to new research from Chainalysis, the country ranks 20th out of 154 in terms of crypto adoption. This is a significant leap for Afghan crypto investors, who failed to make their presence known in last year’s rankings.
Crypto may have gained a foothold in Afghanistan, but participation in the industry is still difficult. That’s because lower internet connectivity and poor electricity supply prevent many people from gaining steady access to digital asset platforms. Many like Farhan Hotak, a crypto vlogger and trader, turn to solar energy to charge their phones.
Additionally, the lack of credit cards and online banking options make it more tedious for Afghan investors to get on crypto-focused platforms.
The political turbulence is also taking a toll on the nation’s crypto circles, some of whom are deferring activities till a clear outcome.