Digital Currency Adoption Soars In Afghanistan Amid Political Changes And Economic Uncertainty

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Afghanistan, a nation that is going through a severe political and economic crisis, is among the 20 countries in the world that use digital currencies the most, revealed the Global Cryptocurrency Adoption Index-2021, prepared by the data company Chainalysis and published last Wednesday.

The document focuses on the analysis of the adoption of cryptocurrencies by ordinary people, coming from 154 countries, and does not take into account cases related to large-scale trading and speculation with these assets. The main conclusion is that during the last 12 months there were an increase of more than 880% in the adoption of cryptocurrencies globally, mainly driven by developing economies.

“Many emerging markets face a significant devaluation of the currency, which leads its residents to buy cryptocurrencies on P2P (peer-to-peer) platforms to preserve savings. People use digital currencies to carry out international transactions, either for personal remittances or for commercial use cases, such as importing and buying goods to sell, “the report explains.

Afghanistan didn’t even show up in the 2020 report, due to negligible crypto adoption figures back then. What’s more, according to Google Trends statistics, quoted Per The Independent, searches for terms such as ‘bitcoin’ and ‘crypto’ increased exponentially in the country over the past year.

Situation in Afghanistan

The overthrow of the Government by the Taliban Movement * left Afghanistan on the brink of a economic catastrophe due to the suspension of international money transfers from major remittance providers such as Western Union and MoneyGram, and, as a consequence, bank closures and cash shortages. The set of problems caused the devaluation of currency national, which, in turn, led to the rise in prices of basic goods and services. Economic experts warned of the risk of a hyperinflation and predicted a contraction of the economy in a 20% for this year.

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Against this background, the decentralized nature of digital currencies makes them an attractive option for Afghan citizens who want to store their savings or transfer money abroad. For example, bitcoin’s fixed supply gives it additional protection against inflation.

* The Taliban movement, designated as a “terrorist organization” by the UN Security Council, is declared a terrorist group and prohibited in Russia.

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