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August 23, 2021 @ 11:04 +03:00
Farhan Hotak isn’t your typical 22 year-old Afghan. In the last week, he helped his family of ten flee the province of Zabul in southern Afghanistan and travel 97 miles to a city on the Pakistani border. But unlike others choosing to leave the country, once his relatives were in safe hands, Hotak then turned around and came back so that he could protect his family home – and vlog to his thousands of Instagram followers about the evolving situation on the ground in Afghanistan.
He has also been keeping a very close eye on his crypto portfolio on Binance, as the local currency touches record lows and nationwide bank closures make it next to impossible to withdraw cash. “In Afghanistan, we don’t have platforms like PayPal, Venmo, or Zelle, so I have to depend on other things,” said Hotak. Afghanistan still mostly operates as a cash economy, so money in Hotak’s crypto wallet won’t help him put dinner on his table tonight, but it does give him peace of mind that some of his wealth is safeguarded against economic instability at home.
It also offers bigger promises down the road: Access to the global economy from inside Afghanistan, certain protections against spiraling inflation, and crucially, the opportunity to make a bet on himself and a future he didn’t think was possible before learning about bitcoin. “I have very, very, very limited resources to do anything. 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,” he said.
For many Afghans, this week has laid bare the worst-case scenario for a country running on legacy financial rails: A nationwide cash shortage, closed borders, a plunging currency, and rapidly rising prices of basic goods. Many banks were forced to shutter their doors after running out of cash this week. Photos featuring hundreds of Kabul residents crowding outside branches in a futile effort to draw money from their accounts went viral.
Without an authority helming the Central Bank, it appears that printing cash to cover the shortfall isn’t an option, at least in the short-term. The Western Union has suspended all services and even the centuries-old “hawala” system – which facilitates cross-border transactions via a sophisticated network of money exchangers and personal contacts – for now, remains closed.
Chainalysis’ 2021 Global Crypto Adoption Index gives Afghanistan a rank of 20 out of the 154 countries it evaluated in terms of overall crypto adoption. And when you isolate for its P2P exchange trade volume, Afghanistan jumps up to seventh place. That’s a big move in just 12 months: Last year, Chainalysis considered Afghanistan’s crypto presence to be so minimal as to entirely exclude it from its 2020 ranking.
“Afghanistan on top makes sense from a capital controls point of view, given it’s hard to move money in and out,” explained Boaz Sobrado, a London-based fintech data analyst. And some experts tell CNBC that Chainalysis could actually be underestimating its overall adoption. “Unlike many other countries, sanctioned nations don’t have good and clear data on P2P markets,” explained Sobrado. He says that is partly to do with the fact that it is harder to track those transactions.
Inside Afghanistan’s cryptocurrency underground as the country plunges into turmoil, CNBC, Aug 23