Why Afghanistan is an example of their usefulness

“Use your bitcoin”

The call to put your cryptocurrency to good use at an event in Miami. Real economic applications outside of investment speculation are still rare for cryptocurrencies.

(Photo: Reuters)

bangkok Investing legend Warren Buffett has nothing to do with cryptocurrencies. Even if you were to sell him all the bitcoins in the world for $25, he wouldn’t be interested, the Berkshire Hathaway boss said at his company’s annual general meeting in Omaha this weekend: “What should I do it?” only value of the coins, i hope to find a buyer who will bid more for them.

Unlike trading companies, company stocks, commodities, and many other asset classes, cryptocurrencies require a longer answer to the question of what value a trade provides. And Buffett, the 91-year-old multi-billionaire, hits a nerve with crypto influencers, most of whom are several decades younger.

13 years after the first bitcoin was mined, the social benefit of future technology remains questionable. Purchasing with cryptocurrencies is not common, even in a country like El Salvador, which has bitcoin as legal tender.

Digital currency is hardly suitable as a store of value given the huge fluctuations. As a rule, there remain purely speculative transactions – or the possibility of concealing dubious and illegal transactions.

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However, Buffett’s core critique overlooks a use case for crypto that actually improves the lives of those involved. This can be observed in Afghanistan. The trigger for development is the Taliban, who have been in power for a year again.

Since the extremists seized power in Kabul by force, the Afghan people’s interest in digital currencies has risen sharply. Radical Islamists have pushed the country into political and economic isolation. Crypto transactions have become an almost indispensable tool for at least part of the population.

Saffron against Bitcoin

Behind all of this is the widespread collapse of the ordinary financial system. Due to the exclusion of the Swift international payment system, transfers from abroad to Afghan banks are almost impossible. About $7 billion in central bank reserves have been frozen by the United States. This has dried up cash flow within the country, making it difficult for residents to access money in their accounts.

In such a situation, digital currencies become an economic mainstay: a Kabul saffron exporter, which ships to the US, Britain, Canada and Australia, claims to be paid 90% in Bitcoin. Local broker Maihan Crypto helps businessmen fearful of Taliban seizure transfer their cash reserves to crypto accounts. And female students receive digital currencies from foreign aid organizations as regular support. Coins are exchanged for local currency at crypto exchange offices.

Market researcher Chainalysis ranks Afghanistan in its “Global Crypto Adoption Index” among the top 20 – taking into account trading volume versus purchasing power per capita. However, crypto has not arrived in mainstream society, only a fraction of the population has access to the internet.

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Anyone who can trade with digital currencies has to accept high fees when exchanging them for local currencies. Bitcoin and other cryptocurrencies are particularly attractive because there are almost no alternatives given the financial sanctions and the loss of confidence in banks.

An extreme situation in which Warren Buffett might also take the opportunity to secure some of his assets with cryptographic help. However, it is to be hoped that the conditions under which digital currencies are actually very beneficial – international isolation, financial and arbitrary state collapse – will be spared to many for a long time to come. And we can only hope that the Afghans will soon be able to rely on their banking system again.

After: Billions of Dollars Stolen: India Fraud Scandals Shake the Crypto World

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