Afghanistan: Can Blockchain and Crypto Prevent or Mitigate The Fallout

Afghanistan: Can Blockchain and Crypto Prevent or Mitigate The Fallout of Failing States?

Does cryptocurrency have the potential to help citizens of nations in conflict? Empirex Capital does the analysis:

Images of refugees piling onto airplanes, women's rights advocates lamenting the inevitable curtailing of their freedoms, and armed men marching through the streets of Kabul, Afghanistan have led many to ask: what could have been done to prevent this, and what can be done to help? The answer to both questions, according to some analysts, lies in the adoption of cryptocurrency.

This article seeks to analyze the potential uses of cryptocurrencies in past, present, and future in Afghanistan. Does crypto have the potential to help failed/leper/authoritarian states, or is it a promising cure-all propagated by overzealous enthusiasts? Keep reading and find out.

An Introduction

Unless you've been living under a rock, you may have noticed that the Taliban have taken over Afghanistan, ending America’s 20-year forever-war, and throwing an already struggling society into chaos. Indeed, millions of Afghans awoke to the sound of explosions in late July, and packed their bags, and headed to the local banks to withdraw money. Many consequently discovered that their financial system, including their savings, had been rendered worthless by the preceding conflict. Congruously, those seeking to flee the country, found this collapse made it impossible to transfer money abroad, while those choosing to stay have been forced to revert to a barter system while the Taliban arrange a new economic system.

How can Crypto Help in Afghanistan?

Industry experts argue that cryptocurrency could (or could have) provided the following benefits during the present crisis:

Cryptocurrency provides an alternative, decentralized financial system to that imposed by the Taliban/corrupt Afghan officials. Using cryptocurrency could enable Afghans (and indeed anyone subjected to an authoritarian state) to control their oppressors’ access to wealth.

Cryptocurrency provides financial services, such as international transfers, investment opportunities, and liquidity to all its users — including the poor, the disenfranchised, and the victims of oppressive regimes. And finally, that cryptocurrency could help avoid unnecessary, unpopular future conflicts.

The pros and cons of each of these ideas will be discussed below, but first, it is necessary to discuss why, and indeed how, cryptocurrency provides these benefits. To do so, we need to review the fundamentals of cryptocurrency and blockchain technology.

The Promise of Blockchain

Indeed, one of Bitcoin’s strongest attributes is its lack of reliance on pre-existing financial infrastructure — you do not need banks, bankers, physical currency, or a stockbroker to buy, transfer, invest in, or make a purchase with bitcoin. All you need is a device and access to the internet. These features have unjustly drawn criticism from federal government authorities who fear its use in illicit activities. The other side of the coin is that these features are particularly useful for Taliban-controlled Afghanistan.

Created on 27th Sep 2021