By George Ward
Once having one of the world’s most investment-friendly banking systems, Lebanon is now a shadow of its former self. The country finds itself in chaos with hyperinflation forcing its currency’s value to plummet further.
Looking for Solutions Amid Economic Chaos
Many Lebanese had no prior encounter with Bitcoin or other crypto assets before the economic crisis. However, by 2019, after coming out of decades of costly wars triggered by wrong market policies, the country plunged into a financial crisis.
Amid the drop in the general standards of living in the country, the decentralized and digital financial assets operating outside the reach of the monetary authorities provide a solution for cash-strapped citizens.
In 2020, banks were closed, preventing people from withdrawing money from various accounts. Moreover, receiving cash via cross-border transfer is also out of the question because this would mean sending in USD and receiving Lebanese Pounds at a much lower rate.
This shows that the country’s national currency has lost over 90% of its value. Then, enter Bitcoin, the leading digital asset.
Many people now receive money from abroad in Bitcoin, with the vast majority of Lebanese seeking ways to earn, save, or receive cash in digital assets.
Following decades of official mismanagement, the country’s banking system is broken beyond a quick fix. Furthermore, the minimum wage in Lebanon has sharply dropped to $17 from $450 a month.
The country’s inflation rate is expected to surpass that of Sudan before the end of the year, with bank account balances depicting just numbers without value.
However, a Zurich-based management expert, Ray Hindi, noted that most people are confident of a reversal in the current situation. He said that not all Lebanese believed banks were bankrupt, but “reality shows another thing,” added the expert.
Crypto To The Rescue
According to a recent CNBC report quoting multiple locals, the people’s survival mode heavily depends on cryptocurrency. As a result, many have started mining crypto tokens, especially Bitcoin, as their sole means of livelihood while they continue searching for jobs.
Meanwhile, others arranged questionable meetings on social media platforms like Telegram, where they swapped Tether (USDT) for US dollars to enable them to buy groceries.
However, the form of crypto adoption in Lebanon varies depending on the people and the conditions forcing them to use digital assets.
According to CNBC, almost everyone involved with cryptocurrency wants a connection with any assets having monetary value. “Bitcoin brings home where they are none says, Georgio Abou Gebrael, an architect.
People now mine Bitcoin to earn money, with some having hydroelectric-powered machines for their activities. However, the process needs expensive machines, technical knowledge, and large amounts of electricity.
As miners operating in Lebanon are in a low-margin ecosystem where energy is the most critical variable, they are forced to move to a location with the cheapest cost of power. Thus, miners are paying for affordable electricity and getting US dollars in return.