Lebanon is currently facing one of its most severe financial crises. Lebanon residents are dealing with hyperinflation, a depreciated currency, and widespread economic turbulence. Many have turned to cryptocurrency, especially Bitcoin.
Economic Crisis in Lebanon
The economic and financial crisis that plunged Lebanon started in October 2019. The COVID-19 pandemic made it worse. Also, the devastating explosion at the Port of Beirut in August 2020 made it worse.
According to the Spring 2021 Lebanon Economic Monitor, Lebanon’s economic and financial crisis ranks among the most severe globally since the mid-nineteenth century. Nominal GDP dropped in 2019. The crisis stems from three decades of irresponsible fiscal and monetary policies. Since the start of Lebanon’s ongoing economic turmoil, citizens’ interest in cryptocurrencies continues to intensify.
Cryptocurrency in Lebanon Today
The crisis led to the collapse of the local banking system in Lebanon. Since then, Bitcoin has witnessed a surge in popularity. Subsequently, there have been numerous nationwide demonstrations and protests directed at government entities and private banks.
The crisis has made Lebanese citizens seek alternative methods to manage their assets away from traditional banking by keeping cash hidden at home. Bitcoin and other virtual currencies, being unregulated and beyond the control of the Lebanese government, emerge as an enticing alternative.
To meet the growing demand for Bitcoin and virtual currencies, there are many local trading platforms and social media groups that have surfaced. These communities offer technical assistance and guidance for acquiring Bitcoin and other cryptocurrencies while also establishing a collaborative platform for peer-to-peer transactions.
Why Lebanese Residents are Turning to Crypto
Inclusion
Bitcoin offers financial inclusion by enabling anyone with a smartphone and internet connectivity to participate in the global economy. This, once again, creates fresh avenues for entrepreneurship, savings, and investment.
Peer-to-peer trading
Bitcoin facilitates peer-to-peer trading, allowing Lebanese citizens to access essential goods and services even in times of scarcity or crisis. Crypto platforms and exchanges enable individuals to directly buy and sell Bitcoin to one another. This eliminates any unnecessary middlemen. This becomes particularly advantageous when traditional banks and financial institutions prove to be unreliable.
International Trade
Cryptocurrency is improving the efficiency of Lebanese businesses in international trade. Making transactions in Bitcoin offers a sense of stability and predictability. Furthermore, it mitigates the risks associated with currency fluctuations, thus facilitating smoother trade between Lebanese businesses and global partners.
Final Words
The future trajectory of Bitcoin and other virtual assets remains uncertain. However, considering the rapid pace of technological advancement and its profound impact on various industries worldwide, the current landscape must undergo significant transformations in the near future. Technology will persist in reshaping the global banking and financial services sectors.
Cryptocurrency is a key solution for the economic crisis in Lebanon, where the populace seeks secure means to safeguard their money from the failed banking system and corrupt government. While it presents the potential for investment returns, you must understand that the dynamics and future trajectory of cryptocurrency remain largely unpredictable.
