Some of the tech-savvy youngsters in Lebanon have reportedly shifted their focus toward cryptocurrencies amid the current monetary crash
Earlier this week, the government closed all local banks due to ongoing risks for employees and customers. It remains unknown when the financial institutions will re-open, which might be one reason why locals started looking for alternative financial instruments, including digital assets.
Crypto to the rescue
The economic situation in Lebanon worsened after the government shut all domestic banking institutions until further notice. Thus, people wanting to withdraw their funds can do so at a considerable loss or take out US dollar-denominated cheques, which are then sold for a fraction of their valuation – currently approximately 20%.
On the other hand, those willing to do something with their savings must act fast because the Lebanese pound is depreciating on a daily basis.
According to a recent Reuters report, some locals (mainly young people with enough knowledge about innovations in technology) have started dealing with cryptocurrencies because of this setback.
Mario Awad – a Lebanese HODLer – told the media that many politicians, security officers, TV personalities, and celebrities have also purchased bitcoin or altcoins lately.
Another individual, introducing himself as Ahmad, argued that cryptocurrencies are “100 times more real than the dollars” Lebanese keep in banks.
According to the coverage, the favorite digital asset of local investors is the world’s largest stablecoin – Tether (USDT). Its value is pegged to the American dollar, and, in theory, it should stay unaffected by the notorious volatility in the crypto market.
The Lebanese government has not yet put the digital asset sector under its supervision. However, the lack of regulations does not seem to be a problem for domestic investors, most of whom do not trust the actions of the ruling body.
“For many, that’s seen as good because we’re not living in a country where regulations and politicians give us hope – quite the opposite. But it does harm widespread adoption (of cryptocurrency),” one of the traders opined.
It is worth noting that crypto mining also thrives in Lebanon mainly due to the cheap electricity prices. Speaking on the matter was the local miner, who disclosed himself as Jad:
“Even if you’re making $10 a day with a normal computer, that’s now several times the minimum wage. After what we’ve been through, I’m never putting one cent back in a Lebanese bank.”
The crisis in Lebanon
Lebanon has been battling a deep economic crisis for a couple of decades. While the country was one of the most well-developed states in the Arab region until 1975, a civil war that lasted until 1990 changed that trend.
The military conflict caused massive loss of human life and property and devastated the country’s financial system. Parts of Lebanon were left in ruins, while the leading political parties continued to divide society years after the end of the war.
Violent events were not absent after 1990 when the nation’s forces clashed multiple times with Israel’s army, while in 2005, Prime Minister Rafic Hariri was assassinated in a car bomb explosion. Political figures accused Syria of the assassination, so another conflict began.
Despite not engaging that heavily in war efforts in the last few years, civil demonstrations and terrorist bomb attacks are not absent in Lebanon.
Needless to say, the turbulence in the country has caused a vast migration wave over the years. Currently, up to 14 million Lebanese people live outside their homeland (two times more than the population of Lebanon itself).
Apart from seeking a peaceful environment for themselves and their families, those individuals also escaped a country where the financial network is barely functioning. The current inflation rate in Lebanon is over 160%, while the recently closed banks only intensified the issue.
The increased interest in cryptocurrencies displayed by locals because of the ongoing situation is not something new. Residents of other countries, including Argentina and Turkey, have also jumped on the bandwagon due to worrying inflation rates or political turmoil.