How Bitcoin can help Lebanon and its economic crises

Guest post by Ian Scarffe 

Lebanese turn to buying bitcoin with a U.S. dollar-pegged tether (USDT), earning it through mining, or using it as a means of payment for work done. In a financial meltdown and economic hardship, there seems to be no hope for people in Lebanon, who are dealing with multiple crises, which has led to the standard of living  deteriorating.

In this article, we delve into the current economic crisis, which has led to an increase in poverty and unemployment, and how the adoption of bitcoin (a decentralized digital currency) has provided a means for the Lebanese to earn, save, and spend money outside the control of banks and politicians.

How Bitcoin can help Lebanon and its economic crises

With the use of blockchain technology, bitcoin offers transparency, accessibility, fraud reduction, and secure transactions. According to locals interviewed by CNBC, bitcoin has given them hope and a lifeline for survival, with many using it as a means of payment, exchanging and trading tether (USDT) for cash, and saving their money. This article also highlights the specific use cases of bitcoin by locals such as Gabriel, an architect who used bitcoin to receive money from abroad and earn a living through freelance gigs.

According to the World Bank, Lebanon has been assailed by the most devastating, multi-pronged crisis in its modern history for nearly three years. Specifically, an economic and financial crisis that started in October 2019.

The economic hardship and financial crisis resulted from the disastrous economic impact of the Beirut Port explosions in August 2020 and the COVID-19 pandemic worldwide.

“Lebanon’s economic and financial crisis ranks among the worst economic crises the world has seen since the mid-nineteenth century,” says the World Bank, according to its Lebanon Economic Monitor for Spring 2021.

Political deadlocks, Bad government policies, and spending decisions, such as closing down banks to locals and refugees who were barred from withdrawing money from their accounts, fuel popular protest and mass revolt, which hampers reform and recovery efforts and worsens the economic situation.

In a 42-page  emergency response plan report, between May 2020 and May 2021, Lebanon was faced with a year-to-year inflation rate of 120 percent, resulting in a 90% drop in the value of its local currency.

According to the report, 78 percent of the Lebanese population was in poverty, with 36 percent reaching extreme and absolute poverty and food insecurity. Nineteen percent of Lebanese lost their main sources of income, unemployment among refugees rose to 50 percent, minimum wages fell to $17 from $450, pensions are virtually worthless, and inflation is set to hit 178%.

The Lebanese looked for another way to improve their lives. A better way to earn, save, and spend money. Liberating themselves from poverty.

A decentralized digital currency backed by blockchain technology is beginning to save Lebanon from its current economic crisis and provide a source of income for the locals. It is a currency that is outside the control of banks and politicians.

Blockchain technology is the leading disruptive innovation in our financial industry, making it more transparent and accessible to all, reducing fraud, and securing transactions.

According to CNBC, in her interview with multiple locals, many Lebanon residents see cryptocurrencies as a lifeline for survival.

“Bitcoin has given us hope,” Gebrael said in his interview with CNBC. “I was born in my village; I’ve lived here my whole life, and bitcoin has helped me to stay here.”

 The Lebanese have adopted bitcoin as their currency. They mine bitcoin and other altcoins; they earn bitcoin for their work done (freelance gigs) and spend it in USDT.

Cryptocurrency in Lebanon today. Use cases of bitcoin.

CNBC reported that the Lebanese explore different ways to use bitcoin, ranging from mining as a means of payment, exchanging and trading tether (USDT) for cash, and saving their money.

Gabriel, an architect in Beit Mery, used bitcoin to get money from abroad. He explains that banks were closed, and locals were barred from withdrawing money from their accounts. Receiving cash via international wire transfer was unfavorable because of a much lower rate than the market value of exchanging the Lebanese pound with U.S. dollars.

As a result, he sought another way by looking at bitcoin.

Gabriel received his first payment of $5 from his freelance gig with bitcoin through a platform connecting freelancers and employers. Today, half of Gabriel’s income comes from his freelance gigs, 90% of which are paid in bitcoin. Apart from earning a living through bitcoin, he also saves his wealth in the currency.

In addition, Gabriel engages in the exchange and trading of tether (USDT) for cash for easy payment of daily needs. His first use case was a service called FixedFloat. He swapped bitcoin for USDT and used various telegram groups to trade tether for U.S. dollars. He does this weekly when the need arises. 

Another Lebanese, Ahmad Abu Daher, works in the mining industry.

After graduation, he needed to find a way to survive and make money. He started with just two to three outdated machines, and with his unrelentless effort, he expanded his business to accommodate more miners.

He says he and his fellow miners work around the clock to constantly add new assets and bitcoin units to the blockchain. 

He commented:

“We can’t sleep.” We can’t have any breaks. All my team is still awake. They don’t sleep. “Our shift is working 16 hours per day, sometimes up to 18 or 19 hours.”

In his statement (Abu Daher), he said we are getting fresh dollars through mining and that we made $20,000 in September after two years of setting up shop—half from mining, half from selling machines, and the rest from trading in crypto.

Abu Daher taps into a hydropower project that harnesses electricity from the Litani River across southern Lebanon. His three machines run on hydroelectric power. According to him, we are getting 20 hours a day of electricity at a very cheap rate and fresh dollars through mining.

In addition, he also offers exchange services with his mining business and charges a 1% commission fee on both parties participating in the trade. He said, “We started by selling and buying USDT because the demand for USDT is very high.”

Rawad El Hajj, a 27-year-old who lives in Barja, also engages in mining operations. He acquired 11 mining machines, which he used to mine Litecoin and Dogecoin, for a monthly income of $426.

Salah Al Zaatare said he started mining dogecoin and litecoin in March of this year (2022) to augment his income. He kept his ten mining machines with Abu Daher which generate a revenue of about $8500 per month.

Cryptocurrency has proven its worth to the commoner in Lebanon. There is an uprising of over-the-counter traders who specialize in swapping various fiat currencies for cryptocurrencies. Local businesses, such as restaurants and coffee shops, also accept cryptocurrencies as a payment method.

Lebanon is well on the road to becoming another developing country with a thriving interest in Bitcoin.

Askar expressed his optimism for bitcoin to CoinDesk:

“The amount being bought is increasing daily… We had many political roundtable discussions every night at the protest areas. “In all discussions, bitcoin is present in one way or another,”. he said.

In another interview with Al Jazeera, Simon Tadros, a 33-year-old bitcoin trader, said that their trade volume had spiked since November. “It started slow, but now it’s going exponential.”

Bitcoin traders rely on social networks like WhatsApp, Facebook, Twitter, and mostly Telegram as their grassroots financial networks for exchanging and trading tether with U.S. dollars.

Despite the prohibition of cryptocurrency as a means of payment under Lebanese law, businesses are still actively advertising on Instagram and other social media platforms that they accept crypto payments. 

In conclusion, bitcoin has provided a lifeboat for the people of Lebanon amid their economic crisis, offering a decentralized and secure alternative to traditional currencies controlled by banks and politicians. Through mining, earning, and using bitcoin as a means of payment, the Lebanese can earn, save, and even exchange their money for cash. As the World Bank describes it, Lebanon is facing one of the worst economic crises in modern history, but with the adoption of bitcoin and other cryptocurrencies, the Lebanese are finding hope and a way to improve their lives.

About the Author:

Ian Scarffe is a serial entrepreneur, investor, key opinion leader and Blockchain consultant with business experience from around the world.

An expert in Startup, Investment, Fintech, Web3 and Blockchain industries. Ian currently consults and advises for a range of multi-million dollar companies.

Ian’s overall mission is to foster a society of economically independent individuals who are engaged citizens, contributing to the improvement of their communities across the world.

Follow Ian Scarffe:

https://uk.linkedin.com/in/ianscarffe

Top-five most Googled cryptocurrencies worldwide in 2022 https://t.co/iHyHS70fmM via @cointelegraph

— Ian Scarffe (@IanScarffe) December 25, 2022

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