Salaries to remittances: Afghans embrace crypto amid financial chaos

In Afghanistan, where a majority do not have bank accounts, crypto's most ardent fans are emerging

When Roya Mahboob began paying her staff and freelancers in Afghanistan in bitcoin nearly 10 years ago, little did she know that for some of these women the digital currency would be their ticket out of the country after the fall of Kabul in August.

Mahboob, a founder of the non-profit Digital Citizen Fund along with her sister, taught thousands of girls and women basic computer skills in their centres in Herat and Kabul. Women also wrote blogs and made videos for which they were paid in cash.

Most girls and women did not have a bank account because they were not allowed to, or because they lacked the documentation for one, so Mahboob used the informal hawala broker system to send money - until she discovered bitcoin.

"It wasn't feasible - or safe - to send cash to everyone, but mobile money wasn't used as widely, and options like PayPal didn't exist. Then we heard about bitcoin," Mahboob, 34, told the Thomson Reuters Foundation.

"It was easy to use, cheaper and more secure than other options. So we taught the girls how to use it and began to pay our staff and contributors with it - we told them it was an investment for the future," she said.

About a third of the nearly 16,000 girls and women who learned basic computing skills at Mahboob's centres also learned how to set up a crypto wallet and receive funds - and, if they were keen, how to trade and invest in bitcoin and ethereum, another major cryptocurrency.

Several of these women left the country after Kabul was captured by the Taliban on Aug. 15, and some have used their crypto wallets to move their money out, help evacuate their families and to settle in new countries, Mahboob said.

Adoption of cryptocurrencies is growing quickly across the world, with El Salvador last month becoming the first country to adopt bitcoin as legal tender, despite fears of excluding the nations' poor.

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Even as large institutional investors have pushed bitcoin to record highs this year, it is also increasingly embraced by those without access to the formal banking system, those in conflict zones or in nations with weak governance, tech and financial experts say.

"In failed or challenged states it provides a way for people to support family members," said Keith Carter, an associate professor at the National University of Singapore School of Computing, citing Venezuela where people have bought essentials with dogecoin after the nation's currency went into freefall.

"Cryptocurrency, if anything, is going to where there is a lack of digital infrastructure, and encouraging development of infrastructure by increasing demand for digital services," he said.

'Good Option'

Cryptocurrencies are shifting from the fringes of finance to the mainstream, with major investors, companies and even countries moving to embrace them as an asset and as a routine payment vehicle.

But it is in countries such as Afghanistan, where a majority do not have bank accounts, where banks are closed for long stretches of time, and the currency has nosedived that its most ardent fans are emerging.

Like Farhan Hotak, 22, who helped his family flee the southern province of Zabul into Pakistan, then returned to keep a watch over his home and post vlogs on Instagram on the evolving situation to his more than 20,000 followers.

Hotak got into cryptocurrency around 2019, he said, when he began to hear about the huge profits to be made in bitcoin. With the lockdowns last year to contain the coronavirus pandemic, he was online most of the time and began investing.

He made quick profits at first, then began to follow crypto users elsewhere and investing in newer coins such as Matic, XRP and xHunter.

"It is a good option for me, and for others like me," said Hotak, who has posted vlogs on his Instagram account on crypto and also got his friends interested.

"I'd like to set up a course in crypto for Afghans - help them understand it better so it can help them. In the meantime I'm going to talk about crypto in every province I visit," he added.

While advocates of cryptocurrency point to benefits including as a hedge against political uncertainty, hyperinflation and a way to send remittances without commissions or brokers, governments remain wary, and China last month banned all crypto-related activity.

Researchers at the University of Technology Sydney found that nearly half of all bitcoin transactions from 2009 to 2017 were linked to buying and selling illegal goods and services, with about one in three users involved in such activity.

While a report from research firm Chainalysis showed the criminal share of all cryptocurrency activity last year fell to 0.34% of total transaction volume from 2.1% in 2019.

For Mahboob and her former students, as well as the growing user base of mostly young men in Afghanistan, cryptocurrency has provided a lifeline, despite the challenges.

"I am thinking now - why didn't we teach about crypto more aggressively, so more Afghans could have crypto wallets and be able to access their money now," said Mahboob, who was named among Time magazine's 100 most influential people in 2013.

"The traffickers and kidnappers will always find a way to abuse a system. But the power of crypto is bigger - especially for women and those who don't have bank accounts, it is very beneficial and so empowering," she said.

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