Why Afghanistan is an example of their usefulness

“Use your Bitcoin”

The call to use its cryptocurrency during an event in Miami. Real economic applications outside of investment speculation are still rare for cryptocurrencies.

(Photo: Reuters)

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

Unlike trading in companies, corporate stocks, commodities and many other asset classes, cryptocurrencies require a longer answer to the question of what value a transaction offers. And Buffett, the 91-year-old multibillionaire, hits a sore spot with crypto-influencers, most of whom are many decades younger.

13 years after the first bitcoin was mined, the social benefit of future technology is still questionable. Shopping with cryptocurrencies does not catch on even in a country like El Salvador, which has bitcoin as its legal tender.

The digital currency is hardly suitable as a store of value in light of the huge fluctuations. As a rule, purely speculative transactions remain – or the possibility of concealing dubious and illegal transactions.

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Buffett’s basic critique, however, overlooks a cryptocurrency case that actually makes the lives of the people involved better. This can be observed in Afghanistan. The trigger for the development is the Taliban, which has been in power again for a year.

Since the extremists seized power in Kabul, the Afghan people’s interest in digital currencies has risen sharply. The radical Islamists have driven the country into political and economic isolation. Cryptotransactions have become an almost indispensable tool for at least part of the population.

Saffron vs Bitcoin

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

In such a situation, digital currencies become an economic pillar: A saffron exporter from Kabul, which supplies to the US, UK, Canada and Australia, claims to be 90 percent paid in Bitcoin. Local broker Maihan Crypto is helping businessmen fearing the seizure of the Taliban transfer their cash reserves to cryptocurrencies. And female students receive digital currencies from foreign aid organizations as regular support. Coins are exchanged for the local currency at cryptocurrency offices.

Market researcher Chainalysis lists Afghanistan in its “Global Crypto Adoption Index” among the top 20 – taking into account transaction volume in relation to purchasing power per capita. However, krypton has not reached the general public, only a fraction of the population has access to the internet at all.

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Anyone who can trade digital currencies must 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 the banks.

An extreme situation where Warren Buffett might also take the opportunity to bring some of his assets to safety with crypto help. One must hope, however, that the conditions under which digital currencies are actually of great benefit – international isolation, a financial collapse and state arbitrariness – will be spared for as many people as possible for a long time to come. And one can only hope that the Afghans will soon be able to trust their banking system again.

More: Billions of dollars stolen: India’s fraud scandals shake the crypto world

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