Lebanon, a western Asian country, has been struggling with the worst economic and financial crisis in the words of the World Bank; in such a distressing time, the citizens have held hopes for cryptocurrency.
The country was renowned for its financial and cultural well-being, but in 1975, with the civil war, it started to record a deteriorating trend. In 2019, it entered into a crisis and defaulted on the sovereignty debt in early 2020, right when the covid-19 pandemic started.
Goldman Sachs, an American multinational investment bank and financial services company, has reported losses worth $70 billion at local banks, and Fitch Ratings, a credit rating agency that rates the viability of investments relative to the likelihood of default, has estimated an inflation rate of 178% this year for Lebanon. The United Nations has projected that about 80% of the population lives below the poverty line, and CNBC reported that the citizens have turned to cryptocurrency as a source of salvation.
The Lebanese citizens have appreciated the idea of adopting cryptocurrency amidst the chaotic scene in different forms like mining dogecoin, earning bitcoin, spending tether, etc. Georgio Abou Gebrael, a 27-year-old architect from a small town in the country, has stated that crypto-based freelance work is a significant source of earnings for him. Similarly, Ahmad Ahu Daher, a 22-year-old graduate, has been mining ether for the past two years using electricity generated from a hydropower project. Currently, Daher and his friends own a crypto farm, and one of them, Rawad El Hajj, a 27-year-old, owns a dozen machines mining litecoin and dogecoin and making about $400 a month.
Statistics suggest that Bitcoin is preferred by Lebanese people over fiat in making international payments or transactions, given the high transfer rates involved in the fiat system. Lebanon traditionally relied on remittance, constituting about 25% of its gross domestic product in 2004.
Marcel Younes, a Lebanese pharmacist, uses crypto mainly as a store of value; in 2019, he converted about 70% of his bank balance into Bitcoin. However, Younes hasn’t been much concerned with the 70% loss faced by the asset in the past year, mentioning the 3-year journey of Bitcoin from $3,500 – $20,000 within three years.
Significant interest from Lebanese citizens, including Daher, has been recorded in tether (USDT), the stablecoin pegged to the U.S. dollar considering its high global interest.
Many eateries, electronic stores, etc., have also started accepting USDT as payments instead of fiat, giving the convenience of choice to the customer; however, the country’s law prohibits the use of crypto as a means of payment.