Living in the chaos of a deep crisis, the Lebanese have turned to cryptocurrency, a new media report has confirmed. From earning much-needed income through mining and labor, to storing wealth and paying in shops, bitcoin, tether and other cryptos have begun to crowd out the Lebanese pound hyper-inflated and the US dollar hard to come by.
Cryptocurrency becomes a lifeline for some Lebanese trying to make ends meet in Meltdown
With its capital Beirut once called “Paris of the Middle East”, before the civil war broke out in 1975, and known as an offshore banking destination rivaling Switzerland, after the end of the conflict in 1990, in recent years Lebanon has been struggling to cope with a looming economic and financial crisis – among the worst on the planet, according to the World Bank.
The country plunged into crisis in 2019 and its government defaulted on its sovereign debt in early 2020, just as the Covid pandemic was spreading around the world. With losses of up to $70 billion in local banks, according to Goldman Sachs, inflation is expected to reach 178% this year, as Fitch predicts, and nearly 80% of the population living below the poverty line , estimated by the UN, cryptocurrency has started to look like a source of salvation for some, CNBC notes in a report.
The broadcaster reached out to a number of locals for whom decentralized digital cryptocurrencies have become a lifeline for survival. Although crypto adoption took different forms in each case – from dogecoin mining and bitcoin earning, to tethering spending – all of these Lebanese citizens praised access to some type of money that makes sense to them in the current circumstances. Their experiences are best described in the words of Georgio Abou Gebrael, a 27-year-old architect from a small town near Beirut, who now earns half his income through crypto-paid freelance work found online:
Bitcoin really gave us hope. I was born in my village, lived here all my life, and bitcoin helped me stay here.
Others, like Ahmad Abu Daher, a 22-year-old American University of Beirut graduate, recognized the potential of crypto mining as a profitable business. A little over two years ago, it started minting ether, when the coin was still based on the proof-of-work consensus mechanism. It used electricity produced by a hydroelectric project on the Litani River in southern Lebanon.
Having started with just three mining devices, Daher and his friend have since created their own crypto farm and now also host rigs for other people. One of them is Rawad El Hajj, a 27-year-old man with a marketing degree, who owns a dozen machines producing litecoin and dogecoin at Daher’s facilities, earning him more than $400 a month.
Bitcoin, Tether used as a store of value, means of payment in Lebanon
Bitcoin has replaced fiat in payments from abroad for people like Gebrael, who says accepting US dollars would mean receiving a much smaller amount than originally sent and in pounds. Lebanon has also traditionally relied on remittances, which exceeded a quarter of its gross domestic product in 2004. But pharmacist Marcel Younes uses crypto primarily as a store of value. The man withdrew all the money from his bank in 2019 and has since converted 70% of his money into bitcoin.
Asked about the reliability of holding wealth in an asset that has lost 70% in the last year, Younes told CNBC that he wasn’t too concerned about the price of BTC because he bought his coins. when it was around $20,000 and recalled that the main coin sold for just $3,500 three years ago.
Other Lebanese are more confident in tether (USDT), the stablecoin pegged to the US dollar. “We started by selling and buying USDT because the amount of demand on USDT is very high,” admitted Abu Daher, the miner who also offers crypto exchange services.
Although the use of crypto as a form of payment is prohibited by law, a growing number of businesses have started accepting payments in tether and other coins. “There are a lot of cafes, restaurants and electronics stores that accept USDT as a form of payment, so it’s handy if I need to spend not in fiat, but with my bitcoin savings” , said Gebrael, the young architect who relies on crypto to patch the budget every month.
Do you expect cryptocurrencies to attract more Lebanese users if the crisis in their country worsens further? Tell us in the comments section below.
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