Every news outlet in the world is flush with the same unsettling photos from Afghanistan. As the Taliban took over, hundreds of civilians flooded the Kabul International Airport, clinging to planes with whatever they could carry. 640 Afghans packed into a US military cargo plane. countless others were left behind. This mayhem represents the culmination of a disastrous bipartisan occupation overseen by four American presidents. So, what’s going on here? And how can Bitcoin help Afghanistan under the Taliban?
After 9/11, President George W. Bush authorized military intervention in Afghanistan to overthrow the Taliban. President Obama enacted a troop surge of more than 90,000 soldiers and conducted countless drone strikes to little effect. In 2020, President Trump bypassed the elected Afghan government and struck a deal directly with the Taliban. He agreed to release Taliban leaders in US custody, and to withdraw US forces in his second term. But he didn’t win a second term. President. Biden viewed the war as an unwanted inheritance, and even opposed Obama’s troop surge as vice president. So, in August Biden finally withdrew US forces from Afghanistan, but the tumult didn’t stop there.
The Rise Of The Taliban
The Taliban came to prominence during the decade-long civil war that followed the withdrawal of Soviet forces in 1989. So seizing power after a protracted occupation is kind of their wheelhouse. In the 90s they imposed a brutal religiously conservative regime against the more moderate values of the population. They oppressed religious and ethnic minorities, rolled back civil rights (especially for women). They enforced their extremist vision with public punishments, torture and mass executions.
Since 2001 Taliban leaders have been on the run, dodging drone strikes. Then they retook Kabul with a speed that shocked international observers, and they didn’t even really have to fight. The Afghan army surrendered and they just took over. Even the elected Afghan president, Ashraf Ghani fled the country before the Taliban sacked the capital. Now they’re posturing as more benevolent, but the prevailing fear is that they intend to govern as ruthlessly as before.
Photos of the high-stakes evacuation in Kabul were shocking, but there was another panicked crowd in Kabul. Hundreds crowded outside the New Kabul Bank, trying in vain to withdraw their money amid considerable economic uncertainty. Many Afghans are now facing financial ruin due to cash shortages, bank closures, the suspension of international money transfers.
Afghanistan Has Some Financial Problems
Whenever I see financial instability coupled with authoritarian political structures, I see a fertile flowerbed for Bitcoin. Those that invested in Bitcoin before escaping will find their wealth waiting for them on the blockchain wherever they settle. In the coming months Bitcoin could easily function as a hedge against hyperinflation. It could also serve as a borderless payment processor as legacy payment channels collapse. Afghanistan is now a perfect test case for the utility of Bitcoin.
The country is mostly a cash economy. According to the World Bank, 85% of the population doesn’t have a bank account. The infrastructure doesn’t exist for the crypto economy to put food on people’s table. But it could easily protect people’s savings from seizure by the Taliban. It could also keep their wealth safe from the devaluation of the local currency. There are hurdles to initiating Afghanistan into the crypto economy, but there’s no better time to get started.
The Taliban government is going to face numerous financial problems as they attempt to govern. The elected government funded 75% of public funding with foreign aid. Now that’s gone. The World Bank responded to the takeover by halting all funding for projects in Afghanistan. The IMF is withholding roughly $460 million in emergency relief funds. In addition, approximately $9 billion of the country’s financial assets held in US banks was frozen by the US.
Many bank branches in Afghanistan shuttered over cash shortages. Devaluation of the currency is already causing prices to skyrocket. In addition, popular remittance providers like MoneyGram and Western Union have suspended all service to Afghanistan. Afghanistan is being cut off from the global economy, but Bitcoin can solve these problems. Bitcoin plugs individuals directly into the global economy.
Internet Access Is Essential
Widespread adoption of Bitcoin in Afghanistan hinges entirely on internet access. In the 90s there was no internet in Afghanistan, but since 2001 telecommunications services like South Africa’s MTN Group and the United Arab Emirates’ Etisalat Group have moved in. Today fiber optic cables connect Afghanistan to the internet through Tajikistan, Pakistan and Iran. They’ve erected cell towers across the country. Internet access is still mostly in urban centers, but it’s allowed for the emergence of a fledgling digital economy.
The World Bank estimates that only 13.5% of Afghan households currently have access. Alternatively DataReportal.com places the figure at 22%, which still sounds dire. But they also report that 68.7% of the population has access to a mobile phone, which is more promising.
The real question now is how this might change under Taliban rule. In the 90s they banned the internet, along with television, radio, music and pretty much anything fun. Many, especially journalists, are concerned that once they consolidate power they will shut off the internet again. The Taliban has already started to intermittently turn the internet off and on in different parts of Kabul.
The Taliban claims that they want to increase internet access, but can we trust them? MTN has already announced that it would be leaving the Afghan market and Etisalat has not made any public statements. One piece of promising news is that the Taliban met with officials from the Afghanistan Telecom Regulatory Authority (ATRA) to discuss maintaining internet access in the country. Of course this comes only shortly after the Taliban destroyed 28 cell towers. One clue to unravelling this apparent contradiction comes from Mohammad Najeeb Azizi, a former chairman of the ATRA. He said the Taliban is “eager to use the internet in their own favor.”
The Taliban Have Embraced The Internet
It turns out that throttling access, and destroying cell towers was an integral part of their strategy to take over. Keep in mind that the average age of Taliban members is only 25. That means, on average, this is literally not the same Taliban that banned the internet in the 90s. Many weren’t even born yet. This is a new tech-savvy generation, sometimes jokingly referred to as Taliban 2.0. The new Taliban has embraced social media as a propaganda tool. They’ve used thousands of Twitter accounts and WhatsApp channels to try and rebrand themselves as legitimate leaders.
This is a new tool for them, but not a new strategy. In the 90s they focused on propaganda methods that could be spread in rural areas. They distributed audio cassettes to a largely illiterate population. Now they release videos designed reassuring ethnic and religious minorities, and women that their rights will be protected. They use these tools to push a message of peace and unity, while also using them to threaten and cajole people strategically.
Specifically, they flooded social media channels to exaggerate their power level, while cutting off the communication of the elected government. Their message was a mix of amnesty and intimidation designed to create a sense that their victory was inevitable. This allowed them to sweep across the country with little resistance. In short, they’re keeping the internet, because they’re using it to secure power. They’re using it to do what the US military never could; to win hearts and minds. They recognized that to take the country they had to control the narrative. While the Afghan army was learning jumping jacks from US forces, the Taliban was learning social media tactics used by the Arab Spring to organize and rally.
Bitcoin Can Help
The real threat is not that the Taliban will ban the internet. It’s that they won’t be able to pay the bill. They may be good marching around looking intimidating. That doesn’t mean they’re good at actual municipal functions. They’ve seized power, but can they wield it effectively? With their assets frozen and foreign aid halted, can they even keep the lights on?
Assuming Afghanistan stays online, the decentralized and censorship resistant nature of Bitcoin offers many protections to Afghan civilians. In fact, I believe this is the main value proposition of Bitcoin. If the Taliban starts looting the assets of the Afghan people, Bitcoin users could hide their wealth on the blockchain. With remittance services abandoning the country, Bitcoin users can or securely send and receive funds abroad without permission. Those who invest in Bitcoin will also be safe from the rapid currency depreciation that has already begun. Whenever I see waxing dissatisfaction with a failing legacy banking system, and waning confidence in a failing government monetary system, I see an opportunity for massive adoption of Bitcoin.
It’s Already Begun
Exact numbers for adoption are difficult to estimate. But there are some promising indicators. Google Trends shows that searches in Afghanistan for ‘Bitcoin’ and ‘Crypto’ spiked dramatically just weeks before the coup. Chainalysis, a blockchain research group, publishes the Global Crypto Adoption Index. In 2021 they ranked Afghanistan 20th out 154 countries assessed in the report. This represents unprecedented growth compared to their 2020 report where Afghanistan didn’t even make the list. So an enthusiastic crypto community exists, it just needs infrastructure.
The crypto community in Afghanistan is small, and if they’re smart they’re staying hidden. But there are a handful of courageous activists there. In 2018 Janey Gak, who goes by Bibi Janey online, set up a Facebook page to help encourage Bitcoin adoption. She has relevant Bitcoin articles translated into Pasto and Dari. She recently tweeted, “In order to be a truly sovereign state, the Islamic Emirate of Afghanistan must: not join the UN nor allow their agencies to operate in the country; never borrow money; adopt a bitcoin standard.”
For her, Bitcoin is not just about her own financial freedom; it’s about financially liberating her homeland. She endorsed Bitrefill.com, where customers can purchase gift cards with Bitcoin. That could close infrastructure gap between Bitcoin and the consumer economy. She also aims to open her own Bitcoin exchange shop in Kabul so residents can trade crypto for local fiat.
Multiple crypto exchanges already service Afghanistan. With over 2 million users, Coinmama is the most popular in Afghanistan. They offer debit and credit card purchases for a 5% fee, and International Wire Transfer (SWIFT) purchases for free. Although, recent events have caused interruptions in those systems. Person-to-person services, such as Paxful and LocalBitcoins also service Afghanistan.
A Bright Future for Afghanistan
To me, the most exciting crypto project in Afghanistan is one I covered in 2014 called the The Women’s Annex Foundation. Now they go by the Digital Citizen Fund. The first time the Taliban took power, they severely curtailed women’s rights in the region, and many now fear a return to those practices. The Digital Citizen Fund is the antithesis of that ambition, educating and empowering women through digital literacy. Digital Citizen Fund is an NGO that helps women and girls in developing countries, primarily Afghanistan, gain access to technology, and virtually connect to the outside world.
The organization has 11 tech centers in Herat and another two in Kabul where they teach women everything from basic computer literacy to complex blockchain technology. Creating a crypto wallet is a basic part of their curriculum, which leaves me wondering how many women in Afghanistan have been sitting on modest crypto fortunes since 2014, when the price of Bitcoin was around $700. Unfortunately, classes were temporarily suspended after the coup.
Things may look dire in Afghanistan right now, but the seeds of positive change are already there if only they were properly nurtured. With low fees, potential anonymity, and no borders, building up the Afghan economy with Bitcoin is a no-brainer.
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