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Financial Finding

Finding Financial Freedom In Afghanistan

Roya Mahboob — the first female Afghan tech CEO, one of TIME’s most influential people in the world and one of the first entrepreneurs to introduce Bitcoin to Afghanistan — was seven years old when the Taliban first took over her country and invaded her hometown in 1996.

One day she was playing with her bicycle in her front yard, wearing her favorite red scarf, when a bunch of armed men showed up in a jeep, screaming at her father in a language she did not understand. After that, she was not allowed to go outside and play anymore.

“My family took my scarf away, and forced me to wear a black dress,” she said, “just like all the other girls.”

A few days later, the Taliban returned. Its members rolled down her street, armed to the teeth, and went home by home, going into each house by force, looking for any signs of books or television sets.

“If they found any books, they would take them out to the front yard and set them on fire,” Mahboob said. “If they found any VHS tapes, they would set those on fire too.”

She said the most jarring part was that she could no longer go to school. Instead, she was forced to go to the mosque, and study the Quran, and sit through lectures from a mullah who could not even read. For her, all paths to knowledge had been closed, and all bridges to the outside world had been burned down.

Shortly after the Taliban conquered Afghanistan, Mahboob’s family fled into Iran. She told me that her father was a secular leader, and that it had become too dangerous for him to raise a family in a new land of religious fundamentalism. She grew up a stranger in a strange land and as a second-class citizen. But over time she got used to Iran, and when her father decided to move the family back to Afghanistan in 2003, she was terrified.

When she finally arrived back in the city of Herat one night, however, she remembers things were surprisingly calm. Iranian state TV had portrayed Afghanistan as a place of death and destruction, but Roya found her home region stabilized. Now a teenager, she was still forced to wear a hijab, but she found the restrictions much looser than under the Taliban. Yes, there were foreign troops everywhere, but compared to today, she said, there were many new economic opportunities and the security situation was much safer: “There was a sense of hope in the air.”

I. Discovering The Internet

One of the things that intrigued Mahboob most about her new life in Herat was the internet cafe. Living in Iran, she had never been allowed to go to a library or bookstore. Her schooling was limited and based mainly on Islam. Getting other kinds of information was a struggle. Upon arriving in Herat, she heard about a shop that had small boxes that could communicate with each other. If one typed into them, she heard, they would provide lots of information. One could even talk to other people through electronic messages. But, she said, women were not allowed in this kind of shop.

“One day,” she said, “I forced one of my male cousins to take me inside.” The cafe owner would not let them in, but she was persistent, and one early morning he relented. She fell in love with the computer immediately. She learned that the United Nations had started a local computer course for women, and the teacher told Mahboob that if she could get 15 girls to enroll, they could start a class. She rallied her cousins and friends to make it happen. After a six-month course, she was hooked on the web.

The next year, in 2004, Mahboob entered Herat University and took up computer science. Over the next four years, she learned how to code, and her desire to change the world through technology grew.

Unknowingly, Mahboob had tapped into the philosophy of a group of coders who were thousands of miles away: the cypherpunks. They believe that the best way to change society is through technology, not through government. Their philosophy is to innovate without permission. In this sense, Mahboob was one of them.

She continued her studies, eventually working her way up to coordinator of the university’s IT department, where she helped build the campus network architecture. She learned English, mainly to communicate with the teachers, and started working on the Silk Road project, a NATO initiative that helped all the key universities in Afghanistan get linked up with fiber optics.

In 2009, Mahboob met with Paul Brinkley, the U.S. deputy undersecretary for defense. The Americans wanted to build a tech incubator in Herat. By that time, Mahboob had helped create an association of young girls interested in technology and software. According to Mahboob, Brinkley asked her, “Why not start a company? We can hire you.”

II. Mahboob’s Citadel

With contracts from the U.S. government and multilateral organizations, Mahboob built Citadel Software.

Why the name?

“In Herat,” Mahboob said, “there is a beautiful citadel that looms over the rest of the city. It is impressive, even breathtaking.” Mahboob said that her company wanted to be a castle of software programming and a place where women could safely pursue their careers.

Little did she know, she was already on the same page as many Bitcoin users, who often talk of the idea of a citadel where they can retreat into a space of freedom without external control. “I’ll see you in the citadels,” says the popular Bitcoin podcaster Stephan Livera at the end of every one of his 350-plus episodes.

Mahboob founded her own “citadel” and became the first female tech CEO in Afghanistan. To launch, she used some of the money she had saved while working at the university and for the Afghan Ministry of Education. Of course, she had less access to commercial finance than men, but the meeting with Brinkley was her breakthrough. The U.S. government would pay Citadel to consult on the strengths, weaknesses and different approaches to building technology systems in Afghanistan.

After a few months, Citadel also started to win contracts from the Afghan government. At the end of 2011, an Italian businessman saw a documentary about Citadel. He was so moved that he reached out and eventually financed the company, giving Mahboob private investment by the end of 2012.

“Citadel was 85% female,” Mahboob said. “For every woman at Citadel, this was her first job.”

Because it was a mostly female environment, conservative families were more comfortable with allowing their daughters to work there as opposed to at male-dominated organizations.

At the same time, Mahboob started a platform called WomanNX, which helped Afghan women in high school and college work from home, getting paid based on their contributions. Work ranged from uploading short videos to writing articles or translating documents.

At first, Roya paid her employees and the WomanNX contributors in cash. The problem was that the women wanted to send the money to family and pay vendors in different parts of the country. They used the hawala system, an 8th-century money transfer process that relied on brokers and a web of trusted intermediaries.

This ancient platform seemed dated and slow to Mahboob and the women, many of whom already had Nokia cellphones and had started to create and use their own Facebook accounts. Even worse, sometimes the money did not make it through the hawala system, and it was hard to verify that the whole amount reached the recipient.

So, Mahboob researched the idea of mobile money. As it turned out, cellphone-based payment systems like M-PESA, which worked so well in Kenya, never took off in Afghanistan. PayPal was still not available because of U.S. sanctions. And the women did not have bank accounts, so she could not wire them the money. The women had to have their father’s or husband’s permission to open an account, and this was often not granted.

Mahboob’s employees wanted digital control over their time and earnings.

“If I gave them cash,” she said, “their fathers or husbands or brothers might find out and take it away.”

III. Enter Bitcoin

In early 2013, Mahboob’s Italian business partner told her about bitcoin. He said it was a new kind of money that could be sent from phone to phone without a bank account. Unlike the local afghani currency, which was steered by the government, bitcoin floated on the open market. When Mahboob first learned about bitcoin, it was trading at around $13. By the early summer of 2013, it broke $70.

“At first, I did not think the girls would trust Bitcoin,” Mahboob said. “It was too hard to understand.”

But her business partner encouraged her and said: “Let’s try it — what do we have to lose?”

And so Mahboob taught her employees and contractors how to install Bitcoin wallets on their phones, how to receive funds and how to back up their savings. If the girls ever wanted to spend the bitcoin, Mahboob or her sister Elaha would buy it back from them with cash.

“I began to understand Bitcoin as a digital upgrade of the hawala system,” Mahboob said. She and the women liked to get paid in bitcoin because they could keep it on their phone, and no one needed to know how much money they had.

“The girls were happy to finally have a money that the men in their lives could not take from them,” Mahboob said. “It gave them security, privacy and peace of mind.”

Elaha started a business that bought bitcoin from the girls for cash when they needed to purchase things. Some shops in Herat even started accepting bitcoin as a means of payment for clothing.

During the late summer and fall of 2013, bitcoin’s price skyrocketed to more than $1,000. Citadel had put all of its cash assets into bitcoin. Business was booming, and the women could not believe their new wealth and economic freedom.

Mahboob felt invincible.

But in November 2013, bitcoin crashed, losing 60% of its value relative to the U.S. dollar. Citadel’s assets were decimated. Worse yet, its employees’ savings evaporated.

“Our competitors went on the attack,” Mahboob said, “arguing that Citadel was run by frauds who stole money from young girls.”

Mahboob decided to offer to buy back the bitcoin from all of her employees and contractors — more than 150 in all — at pre-crash prices. To salvage what remained of Citadel, Mahboob converted almost all of the company’s bitcoin to U.S. dollars.

2014 and 2015 were hard years for Citadel and Mahboob. She had to lay off a lot of employees, and WomenNX lost popularity. She did not close shop, but she did scale down the business, giving her more time and energy to help young women learn vocational skills through software. In 2014, she launched a non-profit organization called Digital Citizen Fund (DCF) to educate women on how to use computer technology. By 2016, DCF became her primary focus.

“By then,” she said, “many Afghans had lost their trust in Bitcoin. But I could not forget its potential. It stuck in my mind and would not go away.”

Later in 2016 she created a curriculum through Digital Citizen Fund to teach women across many schools how to use Bitcoin, set up a wallet and understand how the network’s “blockchain” ledger system worked. As of August 2021, thousands of women in the Herat area have learned about Bitcoin and attained more financial freedom because of Roya and the DCF.

Roya said the girls liked that they could receive, save and spend Bitcoin without needing a bank account. It only took a few minutes to set up a wallet and write down a seed phrase to back up their savings, in case they lost their phone. They could send the money anywhere in the world in minutes.

“The volatility,” she said, “was the price you had to pay for the rest of these benefits.”

Perhaps most powerfully, Bitcoin could not discriminate by gender. Despite the 2013 crash, the technology was too interesting to ignore.

IV. A Refugee’s Escape

A few of the women did keep their bitcoin from 2013. One of them was Laleh Farzan. Mahboob told me that Farzan worked for her as a network manager, and in her time at Citadel earned 2.5 BTC. At today’s exchange rate, Farzan’s earnings would now be worth more than 100 times the average Afghan annual income.

In 2016, Farzan received threats from the Taliban and other conservatives in Afghanistan because of her work with computers. When they attacked her house, she decided to escape, leaving with her family and selling their home and assets to pay brokers to take them on the treacherous road to Europe.

Like thousands of other Afghan refugees, Farzan and her family traveled by foot, car and train thousands of miles through Iran and Turkey, finally making it to Germany in 2017. Along the way, dishonest middlemen and common thieves stole everything they brought with them, including their jewelry and cash. At one point, their boat crashed, and more belongings sank to the bottom of the Mediterranean. It’s a tragic story familiar to so many refugees. But in this case, something was different. Through it all, Farzan was able to keep her bitcoin, because she hid the seed to her Bitcoin wallet on a piece of tiny, innocuous-looking paper. Thieves could not take what they could not find.

Once Farzan got to Germany, she sold some of the bitcoin for $2,500, making ten-times her initial earnings in dollar terms. Bitcoin helped her start a new life. Reflecting on the countless refugees in recent history, and thinking about how most of them could only bring the clothes on their back with them as they fled, Mahboob thinks Bitcoin could be a difference-maker for so many.

As another example, Elaha saved some of the bitcoin she made back in 2013 and held onto it until 2017, eventually spending it on her college tuition when she was admitted to Cornell University. For the girls who were patient, bitcoin became an enormous treasure.

Today, Roya Mahboob says she uses bitcoin as a savings account and as an investment for the future. The bitcoin she obtained in 2013 for around $100 has increased in value by 500 times. She often uses it to send money from New York, where she spends a lot of time, to friends and family and vendors in Afghanistan.

In the past two years, she said, many hawala system brokers have started to learn about Bitcoin. She explained to me that in Herat there are more and more people willing to buy bitcoin in exchange for cash, and that in Kabul it is even more prevalent. The data supports Mahboob’s observations: when adjusted for purchasing power and internet penetration, the firm Chainanalysis reports that Afghanistan has the seventh-highest peer-to-peer exchange trade volume in the world.

Mahboob said that as Bitcoin becomes easier to use, it will get more adoption. Since 2013, she said, wallets have improved in a staggering way with regard to usability and design. The Digital Citizen Fund plans to continue offering classes to Afghan women and girls today on how to use Bitcoin.

“Thousands of graduates,” Mahboob said, “have built the knowledge for economic sovereignty that they would not otherwise have.”

Mahboob does not see Bitcoin as a Western innovation or a Silicon Valley creation, but rather as a global tool of financial freedom that can empower women. So many girls and women in Afghanistan do not have an ID or a bank account, she said.

“Bitcoin gives them power. They can learn how to mine it, code it or trade it,” she said. “When they earn money, they can convert that into radical self-reliance and power that they can use to escape the traditional role of Afghan women in the home.”

Mahboob does not know if Bitcoin’s mysterious inventor, Satoshi Nakamoto, realized how powerful it would become. To her, it is the most world-changing invention since the internet.

“It is more than just an investment,” she said. “It is a revolution.”

V. Economic Collapse

Today, Mahboob said, Bitcoin is more important than ever for Afghanistan.

In the wake of the fall of Kabul to the Taliban, Afghans are in dire economic straits. Already before the transition, as many as 14 million Afghans did not have enough food to eat. 2.5 million people had already fled the country. Now, bank accounts have been frozen, economic activity has slowed, and remittances have been halted. ATMs are empty — after withdrawals spiked from hundreds per day to thousands per day — and financial exchanges are shuttered.

The afghani has fallen to a record low, falling 5% in a single day last week to reach as much as 100 per dollar. A month ago, the rate was 78 per dollar, and 10 years ago, 58 per dollar. Normally propped up by a flow of dollars, those shipments sustaining the afghani have stopped arriving.

Further exacerbating the situation, the U.S. government has pressured the International Monetary Fund (IMF) to stop the release to Afghanistan of $460 million of special drawing rights, a kind of credit that can be exchanged for hard currency, and has confiscated more than 99% of the country’s foreign reserves, which sit in New York. The German government has suspended $300 million in aid. The World Bank announced that it is freezing its aid mechanism, which has committed more than $18 billion to Afghanistan. Development assistance — which reached $4.2 billion in 2019 — could trickle to zero. Instead of being supported with aid, the Afghan economy could be strangled by sanctions.

Western Union and MoneyGram — two of the world’s biggest money transmitters — have cut off services, and websites like GoFundMe have been blocked from fundraising efforts for “compliance” reasons. Remittances are a key lifeline for the country, making up nearly 4% of the economy or around $800 million annually. But now Afghans are in the cold, greeted by these kind of statements when they try to receive money from abroad:

“Western Union understands the urgent need people have to receive funds, and we are committed to resuming operations for our customers in Afghanistan as conditions permit. We will continue to monitor the situation closely and we will keep all appropriate stakeholders apprised of further developments.”

WasalPay is a service that Afghans use to top up their phones, but the company’s CEO is inundated with requests, and has run out of cash. He does not know how long he can stay in business. Asef Khademi, who was working on a World Bank project to digitize payments in Afghanistan, says all progress has stopped since the Taliban took over.

“They might just destroy it,” he told MIT TechnologyReview. “They might just burn all of these technologies. Who knows?”

Mahboob pointed out that while the Taliban could crush local businesses or shut down financial modernization plans, they cannot stop Bitcoin.

Afghanistan’s former central bank head Ajmal Ahmady — who fled during the fall — has predicted capital controls, currency devaluation, price inflation, and tough times for the poor. He said the Taliban have access to just .1% to .2% of the country’s savings. This, combined with the slowed remittance and aid flows, will crash the currency and cause prices to rise. Ahmady said that there are already reports of wheat prices doubling in Kabul.

There could even be a demonetization event if the Taliban finds the existing currency, installed by the American-backed government in 2002, as not Islamic enough. After all, when the Taliban came to power in 1996, its economic chief declared the legacy currency “worthless” and halted production of new notes.

In this dire climate, experts are predicting hyperinflation and an economy that could contract as much as 20%. People holding afghanis are trying to exchange them for dollars or goods, driving prices up more and more. In a country where only 10% to 15% of the population has a bank account, a quick erosion of the afghani’s purchasing power would be devastating. Some say that opium production or intervention from Russia or China could prevent economic collapse, but Ahmady called that an “over-optimistic scenario.”

“This is always how it is,” Mahboob says. “The poor suffer, no matter what the elites do.”

VI. Bitcoin Fixes This

Mahboob said that in the chaos of this month’s transition, her parents fled Afghanistan, but were not able to bring their money with them. Earlier this year, she flew to Kabul to see them. She tried telling her mother to start converting some of her afghanis into bitcoin. But her mother is traditional, the process seemed unnecessary and she procrastinated.

Mahboob wishes she had been more persuasive. Had her parents put at least some of their money into bitcoin, they could have taken their savings with them when they fled.

“Bitcoin fixes this,” Mahboob said.

She thinks Bitcoin could have helped many other Afghans over the past few weeks — whether they fled and needed to take their savings with them, or stayed and needed an alternative to the afghani — and remains committed to teaching as many people as possible about it in the coming years.

She told me that she is negotiating with the Taliban to try and keep her educational programs going.

“Giving up,” she said, “is not an option.”

Mahboob has already spoken to Taliban spokesperson Timothy Weeks about keeping technology and finance classes for girls going in the Herat area. Weeks is a former professor from Australia who was kidnapped while teaching in Afghanistan, and beaten and jailed for three and half years in a small cell. In 2019, he and an American prisoner were freed in exchange for three Taliban commanders. Upon his release, he seemed to have developed Stockholm Syndrome and has sided with his former captors, now going by the name Jibra’il and running point for the Taliban on digital issues. He is savvy enough to use apps like Signal. Mahboob said he seems open to her ideas.

One objective would be to try and convince Afghan Islamic scholars that Bitcoin is halal. Mahboob thinks that an approach framing bitcoin like a digital hawala system based in gold — concepts that have been a part of Afghan society for thousands of years — could work.

“Religious scholars currently criticize Bitcoin as gambling,” but, she said, “it depends on how you frame it.”

Mahboob has helped many young women — including some of the stars of Afghanistan’s female youth robotics team, which she founded and mentored to worldwide fame — get out in the past few weeks. Five members just arrived in Mexico. But millions of young women remain in the country, and will need ways to connect with the outside world.

Moving forward, Mahboob does not want to retreat to a passive state of simply condemning the Taliban from abroad. She experienced its rule and knows how brutal it is for women’s rights, but said, “we have to work on the ground and push for action, not just write articles criticizing the new government.”

In negotiations so far, Taliban leaders have told her team that in Herat, women will be able to continue to go to school once female-specific buildings are established.

Data is hard to trust in Afghanistan, but estimates say that out of a country of nearly 40 million, there are around nine million internet users, with close to a quarter of the population online, and 90% living on less than $2 per day. Mahboob said that these numbers seem low, and said that a much higher percentage of people, at least young people, have internet on their phones, and that a much higher percentage make more than a few dollars per day, especially through side jobs.

Most of the young generation, she said, have cellphones with internet access. And the Taliban is allowing people to remain online, at least for now. Mahboob’s goal is to convince the Taliban to allow women to participate in the digital economy.

Bitcoin, she said, is a big part of this plan.

VII. A Legacy of Corruption

Mahboob said that over the past 20 years, Afghanistan has seen many achievements, especially with regard to women’s rights, elections and education. The number of Afghan girls attending first grade rose from zero in 2001 under the Taliban to more than 60% in the past decade. But the government’s fatal sin, she said, was corruption.

She blames the collapse on the “selfish behavior” of men like former president Ashraf Ghani and his predecessors.

“The elites only thought about their own interests,” Mahboob said.

Ghani taught at top American universities, worked at the World Bank, gave a TED Talk, wrote a book on fixing failed societies and started an NGO called the “Institute for State Effectiveness,” but then lost Kabul to the Taliban and fled the city, allegedly stealing $170 million in cash along the way.

Afghanistan hosted the longest war in American history, leaving more than 240,000 people dead, but the operation has faced very little scrutiny. U.S. lawmakers never actually voted to declare war in Afghanistan, and the $2.2 trillion cost of the war was only questioned once in 20 years by members of the U.S. Senate Finance Committee.

The U.S. faces an astonishing $10 trillion in debt from 20 years of forever wars in Afghanistan and Iraq: $2 trillion in debt-financing to pay for the wars, $6.5 trillion to be paid on interest by 2050 and $2 trillion for expected expenses related to benefits for four million war veterans. Much of the war money was wasted, as hundreds of millions of dollars of equipment has been destroyed or is now under Taliban control.

Mahboob is critical of the way the West “supported” Afghanistan. Tens of billions of dollars was invested in her country, but little was actually given to Afghans, with most given to American NGOs and companies to do implementation, bringing that money back to the U.S. instead of having it soak into the local society. Out of the $144 billion that was invested in Afghanistan since 2002, an astonishing 80% to 90% ended up back in the U.S. economy, siphoned through “a complex ecosystem of defense contractors, Washington banditry, and aid contractors,” according to Foreign Policy.

Who benefited most from the war? Undeniably, the lives of Mahboob and millions of other Afghan women improved. But the country’s elites, like Ghani, and the military-industrial complex, led by companies paid billions by the U.S. government such as Fluor and Amentum, profited most handsomely. A cynical interpretation would be that the war operation was only sustained for so long to keep funds going to certain companies and interest groups — and not to build serious lasting infrastructure — explaining why the government in Kabul fell so quickly.

One former U.S. soldier said that “the Afghan army wasn’t real. The Afghan Civil Authority was never real. They never collected taxes. There were no courts outside of police robbing people. None of it ever existed … it was just a big jobs program funded by American money, and the moment it looked like the money would go away, everyone went home.”

Mahboob thinks there could be a different kind of future, where Afghanistan is actually independent, and not just something so dependent that it collapses without foreign support.

VIII. A New Chapter

Mahboob said that before the fall of Kabul, she was thinking about reducing her time with her non-profit activities and going back to working entirely on the business side. But now, she realizes that education is more important than ever.

“With everything that has happened in the last few weeks, I can see that our fight has just begun,” she said. “We need to hold the Taliban accountable.”

Even with all that she has accomplished, Mahboob said that she regrets not doing more Bitcoin education.

“If we had done more,” she said, “so many more could have benefited.”

She vowed to double down in this area, telling me that in Digital Citizen Fund programs moving forward, financial literacy and “being your own bank” will be key components, and Bitcoin will be a core part of the curriculum.

“Democracy is over,” Mahboob said. “That chapter has closed and a new chapter has started. We are upset, yes, but we will not give up. I’m going to keep fighting.”

“The women are going to make it,” she promised.

This is a guest post by Alex Gladstein. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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