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Afghan citizens turn to crypto to withstand economic chaos

TL;DR Breakdown

  • Since the Taliban’s takeover last year, Afghanistan has seen an increase in bitcoin acceptance.
  • This is owing to the country’s severe economic state, which has resulted in a significant depreciation of its currency.
  • Many are seeking to safeguard the value of their wealth; thus stablecoins have witnessed the highest level of adoption.
Afghan citizens turn to cryptocurrency to withstand current economic chaos

Citizens of Afghanistan have begun investing in cryptocurrencies in a bid to escape the impacts of the country’s deteriorating economy. Following the Taliban takeover of the government in August 2021, the South Asian country has been plunged into what may be termed an economic mayhem.

The confiscation of Afghanistan’s foreign reserve – worth $9 billion – coupled with the suspension of dollars importation into the country by the U.S government led to a high rate of inflation in the country. This predicament was further aggravated by the fact that the European companies contracted to mint the country’s currency, the Afghan Afghani, stopped providing services to the country as a result of the sanctions imposed on the Taliban-led government.

While the Taliban is presently seeking new contractors, they have been forced to limit the amount of money a civilian may withdraw from a bank every day in order to deal with the scarcity of Afghani in circulation.  This, combined with the rising pricing of goods and services, has prompted Afghans to start keeping their money in cryptocurrencies, notably stablecoins.

Stablecoins, the favorites of many Afghans

Simply put, Stablecoins are digital tokens whose market value is equivalent to a fiat currency or a commodity such as gold. These crypto-assets are similar to other cryptocurrencies, as they are decentralized and not regulated by any central authority. Stablecoins are very popular among the crypto community and according to a report by U.S News, this class of cryptocurrency has a joint market capitalization of over $190 billion. 

Stablecoins were specifically designed to eliminate the volatility in value that accompanies most crypto assets, and by converting their wealth to these digital currencies, Afghans are able to mitigate the effects of the devaluation of their country’s currency.  In fact, many use stablecoins to pay for commodities using the peer-to-peer system of crypto exchanges.

Moreover, there have been reports of the Taliban raiding properties and seizing people’s assets, which is another factor driving the Afghans’ quick embrace of cryptocurrencies as a form of savings.

The Afghans are not the only citizens of a country trying to escape the detrimental effects of a bad economy using cryptocurrency. Sudan, a country in north-eastern West Africa, has also witnessed a withdrawal of international economic assistance due to the country’s democratic government being deposed by a military coup in October; hence the heavy negative effects on its economy, leading many Sudanese to save their money in cryptocurrencies. Other countries with similar circumstances are Venezuela and Argentina.

Muhaimin Olowoporoku

Muhaimin Olowoporoku

Muhaimin loves writing on crypto news aside from being a crypto enthusiast. He has a knack for analysing issues and updating people on what's happening around the globe. He believes that blockchain and cryptocurrency are the most useful systems of mutual trust ever devised.

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