The past week in world affairs has been nerve-wracking. Even for someone sitting a thousand miles away with nothing to give or take, the happenings in Afghanistan were heart-wrenching.
Footage of young men clinging to planes, fleeing likely persecution. Millions of families not knowing what lies ahead for them. Women disempowered and children left to fend for themselves. The agony is real. Leaving the political implications aside, the economic misery clouding the future of Afghanistan, the graveyard of empires, is pretty obvious.
(Image obtained by Defense One shows hundreds of Afghans inside a US military C-17 Globemaster III flown from Afghanistan to Qatar. Photograph: Courtesy of Defense One/Reuters)
The Big Picture: Afghanistan’s Current State of Economic Affairs
Why are we talking of the economic plight of over 40 million Afghans in a blog that covers cryptocurrencies? Well, there is a reason. We’ll get to that in a bit.
In March of this year, even before the present turmoil, the World Bank described Afghanistan’s economy as “shaped by fragility and aid dependence.” 75% of the government’s public spending was funded from international grants rather than its own revenue.
After the Taliban took over Kabul, all donors – including the IMF and the US – have suspended billions of dollars in aid. The net result? A ghastly scenario with a nationwide cash shortage, plunging currency, and rapidly rising food prices.
Visuals showing hundreds of Kabul residents crowding outside empty banks to withdraw their savings have gone viral. “There’s no bank I can go to right now, no ATM,” reported Ali Latifi to CNBC, a journalist born and based in Kabul. Meanwhile, Western Union has suspended all money transfer services.
The looming economic woes, exacerbated by the ongoing events and a closed border, are furthering the humanitarian crisis in Afghanistan, rendering the Afghans helpless. However, there is a tiny little silver lining to someone like Farhan Hotak, a 22-year old Afghan Instagram Vlogger, who has invested in cryptocurrencies.
Bitcoin: A Sliver of Hope
The scope of bitcoin (and other altcoins) is much wider than what cryptocurrencies are to us in stable economies – an opportunity to invest and earn. As reported by CNBC, for Farhan Hotak and many others, investing in crypto has been a measure to safeguard wealth against economic instability.
Though crypto won’t buy them food and other basic supplies, it gives them protection against spiralling inflation and access to the global economy which would otherwise be impossible. Most importantly, it gives them an opportunity to bet on themselves and their futures.
“I’m interested in the crypto world, because I have earned a lot, and I see a lot of potential in myself that I can go further,” Farhan noted.
Farhan isn’t alone in his thinking. Last month, just before the Kabul coup in the land-locked country, web searches for “bitcoin” and “crypto” rose sharply. Moreover, the Global Crypto Adoption Index for 2021 released by Chainalysis puts Afghanistan at the 20th spot in a list of 154 countries indicating soaring crypto popularity among Afghans.
Bitcoin may not fix everything wrong in today’s Afghanistan. But for many people in war-torn countries and crumbling economies, Bitcoin is a sliver of hope. An alternative to an existing financial system that reeks of legacy issues from being exclusivist and undependable.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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