Hello!

I wasn’t able to publish a piece last week as I was mulling over it for too long & decided to re-focus priorities for the week (so I started writing this piece a little earlier!).

I’ll save / re-purpose last week’s piece for another time as it was inviting you to go on a thought experiment with me. I’ll need to flesh it out some more, but it’s gonna be a good one (when I eventually go back to it).

Around this time last year, we heard some tragic news about The Taliban reclaiming Afghanistan and driving a wedge between society and its until-then-democratic institutions.

By the time they rose to power in August 2021, there were already sanctions being pushed through to limit money transfer services and other key goods. This meant a lot of the population relied on our favourite past time here at Living In Beta - Crypto.

However, that’s all changing.

Let’s dive into why and predict the likely path forward from here:

❌ The Taliban crackdown:

There are two camps we can be in: the crypto-skeptics, or the crypto-optimistics.

I’m not one to say that you can’t ever have views in one area or the other if you have a certain belief, but generally, you’re either going to think about all the new use cases that can now happen with crypto, or, you’ll think it’s just a fad and a scam.

Hey, I don’t make the rules (and this newsletter doesn’t discriminate 😇!).

One of the key use cases we’ve consistently come across is the ease of transferring funds, without relying on a centralized intermediary. This could be a bank or a money transfer institution.

This isn’t a hypothetical example - this is exactly what the Afghan people had to deal with to get money out the country and transfer to one other (as well as safely receive funds from abroad). They couldn’t trust the intermediaries or how much value it’ll be receiving the amount in the Afghani (their local currency).

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According to the latest reports, the Taliban government recently banned cryptocurrencies and arrested 16 local exchanges in the past week. Yikes. No notice, no warnings.

The reason for the shutdown is because: “digital currency trading has caused lots of problems and is scamming people, therefore they should be closed”.

The macro:

Afghanistan's economy has suffered a ton in the past 12 months.

Since the Taliban took control, large parts of the country have been pushed further into poverty. Unemployment in the country has jumped sharply (see below):

Why are the taliban so anti-crypto?

Well apparently, cryptocurrencies are too volatile - who’d have thought?!

On top of this, crypto exchanges aren’t based in Afghanistan (yeah, because you shut them all down *facepalm*).

The REAL reason (which you’d probably expected all along): the decentralized nature of cryptocurrencies allows people to circumvent authorities and transact with others. They can’t control it, so they’re scared of it.

They’ve even brought out terms like ‘haram’ (which basically means it’s ‘forbidden’ under Islamic law). They want people to use local banks to transfer money, even if those banks are severely limited and have caps on the amount someone can withdraw.

The benefits of crypto to the Afghan population:

So imagine your country has just been hit by a wave of sactions. No easy access to get goods you could so nonchalantly acquire at a moment’s notice. No easy way to accept money from friends and family. Where do you go? Cryptocurrencies.

Now this wouldn’t have been the de facto solution if payment transfer companies like Paypal and Venmo worked - thing is, they don’t (either because they don’t exist yet or because…..they’re banned).

Also, why go through the hassle of setting up a bank account (and providing a house deed & working statement to prove your legitimate) when you could sign up using Binance and not worry about complex transaction fees? 

Many people have seen the benefits - according to a recent Chainalysis study, Afghanistan was ranked 20th among 154 countries in the “2021 Global Crypto Adoption Index” - so the people of Afghanistan are willing to invest and they’re making it work.

Conclusion:

When there are no standard banks or monetary services, people look to crypto as a safe haven. It doesn’t require intermediaries to efficiently run, as everything is on an open ledger (a blockchain) and powered by a decentralized network (computer nodes across the world).

I can see a future where the Taliban try to create a central bank digital currency, however, it’s a lot of upfront resource and there’s no guarantee it’ll even work.

Either way, let’s hope it works out in favour of the people, whatever their choice.

📚 Interesting resources of the week:

The Ethereum Merge is upon us - I liked the short thread in terms I can semi-understand (football/soccer fan here, not bball).

CAC: Customer Acquisition Chaos

Enjoyed reading this in-depth look at consumer brands and the routes they’ve taken to reach the treasure at the end of the rainbow (the consumer) and at what cost.

Why Reddit’s CEO is still big on the blockchain

I’ve been thinking about Reddit rolling out some NFT PFP’s for a while - glad they’re taking a sensible stance and going ALL IN (just kdiding, read the article to find out more).

Until next time

I hope you enjoyed this week’s edition - I'd love it if you shared it with a friend or two.

Got feedback? Reply to this email or tweet at me and let’s chat.

Fahim