After the Taliban took full control of Afghanistan in August last year, many international NGOs and services ceased operations in the country. Among them are payment services such as Western Union and Swift.
Many Afghans then began to learn about cryptocurrencies and underlying blockchain technology in order to at least receive remittances from abroad. Because electronic payment services such as PayPal and Venmo were never available in the 5,000-year-old country, Afghans have lost many opportunities in the electronic business world.
“We missed a lot of opportunities like blogging, affiliate marketing and online dropshipping because PayPal pays for most of them,” local crypto-dealer Heshmat Aswadi told Cointelegraph. “I learned a lot about blogging, but it was useless because I could not get paid online.”
Al-Aswadi is studying business administration at Herat University and wanted to start a blog, but when he was looking to raise money, the 22-year-old gave up.
He later said he was introduced to cryptocurrencies “which were some of the best things that have ever happened to him.” Al Aswadi learned as the crypto industry grew in mid-2021. He now trades small amounts of digital assets that allow him to make extra money.
Banks and governments, especially developing countries such as Afghanistan and Iran, should consider using digital currencies as a legal tender, Al-Aswadi said. “They can at least use a central bank’s digital currency,” he added.
“Although there is no need for our government to spend extra money on a central bank project for digital currency if they do not want a decentralized asset, a digital central bank currency can still be an option.”
When the Taliban took power, money transfer services such as Western Union and Swift stopped operations in the country, and many Afghans who received money from relatives abroad were left without a source of income. Currently, the only way to receive money from other countries is to use cryptocurrency.
During the cryptocurrency boom of 2021, Afghanistan was ranked number 20 out of 154 countries in the Chainalysis Cryptocurrency Adoption Index 2021.
Ali Rahnaward, a local crypto-trader and merchant in Herat, one of the largest cities in Afghanistan, says he sees a huge increase in the number of Afghans using cryptocurrencies. Rachnaward said his clientele has increased “tenfold” in the past year.
“The main reason for this growth is that people need to find a way to get money from families and friends living in other countries,” Ranward told the Cointelegraph.
“It’s much cheaper and faster” than previous payment systems like Western Union, “Rachnaward said.
In addition to trade, he has for the past four years taught Afghans to trade and use cryptocurrencies. This knowledge will come in handy if the Taliban government in the country decides to start using cryptocurrency to open up for e-commerce in the country.
“Encryption could pave the way for the Taliban to return to international operations.” He said: “While the Taliban does not appear to have the necessary knowledge on how to use blockchain technology at the moment, they can at least help by not banning cryptocurrencies.”
Juma Mosque in Herat, Afghanistan. View from the top of the east roof. Source: Didier Thais
How is encryption used in Afghanistan?
In November 2021, Binance announced that it would no longer support Swift bank transfers to user accounts in a wide range of countries, including Afghanistan. Since most people in the country use Binance, it has become difficult to deposit or withdraw cryptocurrencies to and from a cryptocurrency exchange.
At the moment, to receive cryptocurrency, customers go to a cryptocurrency retailer store, where they pay the amount in local fiat currency, Afghan or US dollars.
In order for the seller to receive the cryptocurrency, they must contact someone abroad to send the cryptocurrency to the wallet. The seller usually uses the local bank transfer system to deposit money into the sender’s bank account. The reason sellers do not use credit or debit cards is because they charge about 11% for international purchases, Rachnaward said.
The seller then asks for the customer’s wallet address and sends the cryptocurrency, mainly Tether (USDT).
Did the Taliban ban cryptocurrency?
The Taliban has not yet announced any rules or bans on cryptocurrencies. Ranward said that if a senior Muslim scholar says that cryptography is haram (forbidden), the Taliban will ban it “without thinking twice.” He added that if they consider it halal (permitted), “we can use the best technology in the world forever.”