Lebanese People Turn to Crypto Amid the Country’s Financial Collapse: Report
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Some of Lebanon’s tech-savvy youth have reportedly shifted their focus to cryptocurrencies during the current currency crisis
Earlier this week, the government closed all local banks due to continued risks to employees and customers. It remains unclear when financial institutions will reopen, which may be one of the reasons why locals began looking for alternative financial instruments, including digital assets.
Crypto to the Rescue
Lebanon’s economic situation worsened after the government closed all domestic banks indefinitely. Consequently, people who want to withdraw their funds can do so at a significant loss, or withdraw US dollar checks, which are then sold at a fraction of their value – currently around 20%.
On the other hand, those who want to do something with their savings have to act fast because the Lebanese pound is weakening daily.
According to a recent Reuters report, some locals (mostly young people who have enough knowledge about technological innovations) have started dealing with cryptocurrencies due to this setback.
Mario Awad – a Lebanese HODLer – told the media that many politicians, security officials, TV personalities and celebrities have also bought bitcoins or altcoins recently.
Another person, who identified himself as Ahmad, claimed that cryptocurrencies are “100 times more real than dollars” that Lebanese people keep in banks.
According to coverage, the favorite digital asset of local investors is the world’s largest stablecoin – Tether (USDT). Its value is pegged to the US dollar and, in theory, should not be affected by the notorious volatility of the crypto market.
The Lebanese government has yet to put the digital assets sector under its control. However, the lack of regulation does not seem to be a problem for domestic investors, most of whom do not trust the functioning of the governing body.
“Many people think it’s good because we don’t live in a country where regulations and politicians give us hope – on the contrary. But it hinders widespread adoption (of cryptocurrencies),” one of the traders said.
It is worth noting that cryptomining is also booming in Lebanon mainly due to the cheap price of electricity. A local miner, who revealed himself as Jad, spoke about it:
“Even if you make $10 a day on a regular computer, it’s now several times the minimum wage. After what we have been through, I will never put a cent back into a Lebanese bank.
Lebanon has been struggling in a deep economic crisis for a couple of decades. Although the country was one of the most developed countries in the Arab region until 1975, the civil war that lasted until 1990 changed this trend.
The military conflict caused massive loss of life and property and destroyed the country’s financial system. Parts of Lebanon were left in ruins, while leading political parties continued to divide society years after the war ended.
Violent incidents have not been absent since 1990, when the country’s forces clashed several times with the Israeli army, while in 2005 Prime Minister Rafic Hariri was assassinated in a car bomb explosion. Political figures blamed Syria for the assassination, so another conflict began.
Despite not being as heavily involved in hostilities in recent years, civil protests and terrorist bombings are not absent from Lebanon.
Needless to say, the country’s turbulence has caused a large wave of migration over the years. Currently, up to 14 million Lebanese live outside their country (twice as many as in Lebanon itself).
Not only are they looking for a peaceful environment for themselves and their families, they are also fleeing a country where the financial network barely works. Lebanon’s current inflation rate is over 160%, while the recently closed banks only made matters worse.
Due to the current situation, the increased interest shown by locals in cryptocurrencies is not a new thing. Residents of other countries, including Argentina and Turkey, have also jumped on the bandwagon due to worrying inflation or political turmoil.
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