Lebanese nationals steal bank accounts and mine Bitcoin to survive
Desperate Lebanese citizens are turning to cryptocurrency as a lifeline after years of fiscal mismanagement in the region once known as the “Paris of the Middle East.”
As triple digit inflation continues, citizens have started using Bitcoin, cryptocurrency mining and Tether to pay for goods and services.
The devaluation of the Lebanese currency
After the central bank failed to keep the Lebanese pound pegged to the US dollar in 2019, citizens have seen their savings devalue at an alarming rate. This devaluation worsened during the pandemic, taking the exchange rate from 1,500 Lebanese pounds to the US dollar to 40,000 Lebanese pounds per dollar at press time.
Furthermore, any money deposited in banks before 2019 is now only worth 10-15% of its original value when customers withdraw money. In addition, the banks only pay out the full value of money coming from abroad or money deposited after 2019. Limited access to ATMs and withdrawal limits have exacerbated the problem.
As a result, some desperate depositors have taken drastic measures to get their money back, opting to “rob” their own bank accounts, dressed in black and brandishing toy guns at confused bank employees. One man, Bassen Hussein, escaped with $35,000 after holding up a branch of the Federal Bank of Lebanon.
No need to rob banks with crypto in Lebanon
But some citizens are finding less violent ways to beat the failed system. According to CNBC, a person earned $20,000 in September 2022 running a mining operation powered by hydropower drawn from the Litani River. The miner keeps his crypto in escrow wallets on Binance and KuCoin.
Mining is a computationally intensive process whose function is akin to a decentralized clearing house. The mining process validates and deletes cryptocurrency transactions and is how a proof-of-work cryptocurrency network is secured. Miners are awarded new coins to help secure the network.
An architect turned freelancer trading Bitcoin in his Trezor wallet, earned through freelance work, into USDT. He then takes the USDT to a Telegram group and exchanges it for US dollars to buy groceries.
Some over-the-counter traders exchange selected cryptocurrencies for fiat, while other citizens can use one of six Bitcoin ATMs. Five ATMs are in the capital Beirut, and one is in Amchit, a coastal town 40 km north of Beirut.
Bitcoin Seen as Alternative to ‘Failed Monetary System’
While some Lebanese citizens worry about Bitcoin’s volatility, others are indifferent. They have invested in Bitcoin because they see it as an answer to a failed monetary system. In August 2022, the World Bank condemned the Lebanese authorities for running a Ponzi scheme. In 2016, the central bank began offering astronomical returns on US dollar deposits that could only be paid with money deposited by others.
“There are many sins and many sinners,” said economist Roy Badaro.
The scale of fiscal mismanagement and the social decline has prompted crypto-believers to invest in the volatile asset class, which they see as a solution to a corrupt system that shows little sign of abating.
“Bitcoin offers a system that is incorruptible; a system that is basically permissionless and censorship resistant,” said a former Pfizer employee who has 70% of his personal funds in Bitcoin.
According to TradingEconomics, inflation increased to 162.47% in September 2022, slightly up from 161.89% in August 2022.
For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.
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