Lebanese People Turn to Crypto Amid the Country’s Financial Collapse: Report

Please fol­low and like us:
Pin Share

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.

SPECIAL OFFER (Spon­sored)

Binance Free $100 (Exclu­sive): Use this link to reg­is­ter and receive $100 free and 10% off fees on Binance Futures first month (terms).

PrimeXBT Spe­cial Offer: Use this link to reg­is­ter & enter POTATO50 code to receive up to $7,000 on your deposits.

Source link

Please fol­low and like us:
Pin Share

Leave a Reply

Your email address will not be published. Required fields are marked *