Bitcoin Stability Amidst Turmoil: Afghanistan Embraces Cryptocurrency Amid Taliban Takeover

Since the Taliban gained command of the majority of the nation, Afghanistan citizens have been using bitcoins to store and exchange money. Hundreds of citizens of Kabul, the nation's capital, hurried to banks to extract money on August 15, as Taliban forces seized control of the region and demanded the government's capitulation, only to run against a stonewall. Cash scarcity, severe constraints, and a rapidly depreciating national currency have prompted Afghans to look for options, including Bitcoin.

"A nationwide cash scarcity, restricted borders, a national currency at historic lows, and fast increasing prices of essential items are driving some Afghans to resort to cryptocurrencies like bitcoin," according to CNBC.

As per CNBC and statistics from Chainalysis, cryptocurrencies were the most sought-after alternative for individuals seeking some financial autonomy to escape the nation due to their digital structure. Many Afghans have adopted Bitcoin as a means of securing their funds, building and preserving fortune, and achieving independence to escape the state with their investments. Some have started speculating on cryptocurrencies in an attempt to supplement their earnings amid Afghanistan's present turmoil.

In Afghanistan, trading in cryptocurrencies is a relatively new idea, but the nation has witnessed the increasing acceptance of digital currency in 2021. In the Chainalysis 2021 Global Crypto Adoption Index, the state was placed 20th out of 154 countries, a significant increase over 2020, when it did not even enter the index.

This year's report, which attempts to assess cryptocurrency acceptance by "regular people," was topped by Vietnam, with Afghanistan scoring the highest of any Central Asian nation. According to the index, worldwide use of cryptocurrencies has increased by more than 880% in the last year, primarily attributable to developing nations. According to the statistics, numerous Afghans made investments in cryptocurrencies this year, owing to fears of a financial downturn as the Taliban launched their campaign to retake the authority of the nation.

Several developing economies are experiencing substantial currency depreciation, prompting citizens to purchase cryptocurrencies on peer-to-peer marketplaces to protect their investments. Some in these fields utilize Bitcoin to conduct foreign trades, whether for personal transfers or business purposes like exporting and selling items.

According to Google Trends, searches for phrases like bitcoins and cryptocurrency have increased dramatically in the previous year. Thanks to a combination of bank shutdowns, cash scarcity, and the halting of global remittance from prominent remittance sources, many individuals in Afghanistan are suffering economic catastrophe as a byproduct of the Taliban's sudden seizure of the Afghan state.

According to CNBC, a 22-year-old Afghan with Bitcoin assets has been maintaining a careful eye on his investment in Binance, the world's largest cryptocurrency exchange. Farhan Hotak is one of the few Afghans who will be spared the devaluation of the currency brought on by the Taliban's ascendancy. Many who have put money into cryptocurrencies will be shielded from the currency's fast decline. It should be mentioned that once the Taliban gained authority over the region, the Afghani, the nation's currency, collapsed.

“I do not have many resources to work with. I am engaged in the cryptocurrency sector because I have made a lot of money and believe I have a great opportunity to go much further”, he told CNBC.

The United States has also withheld 9 billion USD in central bank holdings, while the depreciation of the Afghani currency has caused costs of essential goods and services to soar. Financial analysts have cautioned of the possibility of deflation in Afghanistan, and a 20% decline in the country's economy this year.

The decentralized structure of cryptocurrencies such as bitcoins makes them an appealing alternative for Afghans looking to save money or send money overseas. Bitcoin is anti-inflationary due to its finite supply; approximately 21 Million bitcoins will ever exist. To protect Afghanistan's autonomy, many crypto supporters have also urged the adoption of a Bitcoin standard.