Key Insights:
- Lebanon is neck-dip in an economic crisis that has crashed the Lira
- The Lebanese have found the crypto as a hedge against inflation, hence the exchange of the Lira for BTC
- Crypto mining is on the rise in villages in Lebanon, even though they are illegal.
Lebanon, a Middle East country, is currently facing a huge financial crisis. The central government is considered weak and paralyzed.
Recently, the country has been facing several economic challenges, such as hyperinflation. The collapse of the banking sector remains the greatest challenge in Lebanon.
Significantly, the Lebanese currency, Lira, has lost its value and become worthless. The World Bank describes the Lebanese Lira and the economic situation as the third worst economic collapse since the 19th century.
The fiat currency in Lebanon has been at an all-time low depreciation since 2019. To save face and preserve individuals’ wealth & investment, Lebanese are now acquiring Bitcoin (BTC) in mass.
Lebanese Prefer Bitcoin (BTC)
The value of every Lira remains volatile. Every day, the value drops, with citizens struggling to access necessities with their hard-earned money. The purchasing power of the Lira keeps dropping.
Furthermore, this economic meltdown contributed to the covid-19 supply chain disruption, prolonged lockdown, the Ukraine war, and the 2022 Beirut explosion.
On this basis, the Lebanese are finding solace in Bitcoin, a decentralized payment system. Newark Agrawal tweeted that people in Lebanon use cryptocurrency to weather the financial crisis.
Over the years, the adoption of cryptocurrencies has continued to increase. However, the urgency to exchange the fiat currency for BTC in Beirut has soared. Crypto tokens are considered a hedge against inflation.
Cryptocurrencies are decentralized and exist outside of a formal financial system. They are free from regulations or central government, as in the case of the fiat currency in Lebanon.
Since the demand for cryptocurrencies has increased, Lebanon has continued to witness the emergence of mining operations.
In Lebanon today, there is the proliferation of a parallel industry of small-scale crypto-mining operations. Since Lebanon provides renewable energy across the country, mining is cheaper.
Mining has become a widely spread venture in villages such as the Chouf mountains and Baalbek. These are choice areas because there is hydroelectric power in the Chouf Mountains and solar panels near Baalbek.
However, cryptocurrency mining and trading are (formally) illegal in Lebanon. Even though there are no formal regulations or sections. The government has several economic woes to solve rather than going after miners and traders.
Conclusion
Every country in the world is currently facing one economic challenge or the other. While countries like America have been able to control theirs, it keeps deteriorating in places like Lebanon.
As the Bitcoin exchange for Lira continues to increase, the exchange of the Lira to the dollar is also soaring. There are now informal money-changing systems called Hawala networks. This is mostly found in the upscale district of Beirut, the capital of Lebanon.
