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 cryptocurrencies for a bundle of banknotes.

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

This amount, which makes afghanis an exchange office, is crucial for paying your rent and feeding your 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 foreign assets and the fall in international aid.

Digital currencies and its decentralized architecture, immune to international sanctions, allow 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 was 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 disadvantaged country.

It is now 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's hard to get it out: cash withdrawals are limited to the equivalent of $200 a week for individuals and $2,000 for businesses. And customers must queue for hours for these transactions.

Cryptocurrency transfers allow oenegé to overcome these obstacles and ensure that every donation reaches those who need it most, 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 ensure the financial security of its students, the oenegé avoids paying them in bitcoins, the best known cryptocurrency but with a very oscillating 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 forex trader Hamidullah Temori.

There has been an influx of new customers over the past six months, many of whom convert cryptocurrencies 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, the United Kingdom, Australia and Canada in early 2021, now collects 90% of his orders in bitcoin.

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

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

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

Even so, the volume of trade remains very low and will remain so due to the lack of internet access and illiteracy in this area, he says.

- “The 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 specializing in new technologies. He receives his salary in “stablecoins”, low-volatile cryptocurrencies, which has allowed him to withstand the galloping inflation and the fall of Afghani.

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

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

The fellow student Parisa Rahamati earned $600 in February by speculating on cryptocurrencies such as Ethereum or Avax, a money fallen from the sky 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 double the bet or stay at zero.”

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