Cryptocurrency Becomes the New Lifeline for Some Lebanese

Cryptocurrency Becomes the New Lifeline for Some Lebanese

In bankrupt Lebanon, cryptocurrency is the new lifeline for many people. CNBC reports that people in Lebanon have been turning to cryptocurrency amid the deep economic crisis prevailing in the country. People are earning from mining and storing crypto as wealth. Paying in crypto to buy groceries and essentials, including life-saving medicines, from stores. Bitcoin, tether, and other cryptocurrencies have started replacing the hyper-inflated Lebanese pound and the exorbitant US dollar.

How Lebanese Use Crypto to Make Ends Meet in the Meltdown

The capital city of Beirut was once called the "Paris of the Middle East" before the civil war broke out in 1975. After the conflict ended in 1990, it was known as an offshore banking destination rivaling Switzerland. However, in the past few years, Lebanon has been struggling to cope with a looming economic and financial crisis.

The country plunged into a deep economic crisis in 2019 when the government failed to service its sovereign debt in early 2020, just as the Covid pandemic was spreading around the globe. Goldman Sachs has estimated losses of up to USD 70 billion at local banks. Fitch's projected inflation is likely to reach 178% this year. According to the United Nations, nearly 80% of the population in Lebanon lives in poverty. CNBC reports that cryptocurrency is now the source of salvation for many in Lebanon.

The broadcaster reached out to several Lebanese people for whom decentralized digital currencies have become a lifeline for survival. Crypto adoption has taken different forms in use cases, such as mining dogecoin, earning bitcoin, and spending tether. But in all the use cases, Lebanese citizens have accepted cryptocurrency because it makes sense for them under the current circumstances. Their experiences are best described by Georgio Abou Gebrael, a 27-year-old architect from a small town near Beirut. Gebrael now makes half of his income through cryptocurrency-paid freelance work found online.

"Bitcoin has given us hope. I was born in my village and lived my life here, and bitcoin has helped me to stay here," he said.

Ahmad Abu Daher, a 22-year-old graduate from the American University of Beirut, recognized the potential of crypto mining as a profitable venture. Two years ago, he began minting ether when the coin was still relying on the proof-of-work consensus mechanism. He used electricity generated from a hydropower project on the Litani River in southern Lebanon.

Having started with just three mining devices, Daher and his friend have since established their crypto farm and are now hosting rigs for other people, too. One of them is Rawad El Hajj, a 27-year-old with a marketing degree, who has a dozen machines minting litecoin and dogecoin at Daher’s farm. He is now making over USD 400 per month.

Bitcoin, Tether Used for Store of Value, Means of Payment in Lebanon

Bitcoin has replaced fiat payments from abroad for people like Gebrael. Accepting the US dollars would amount to receiving less than was originally sent in Lebanese pounds today. Traditionally, Lebanon has largely relied on remittances, which exceeded a quarter of its gross domestic product in 2004. But pharmacist Marcel Younes uses crypto mostly as a store of value. The man withdrew all the money from his bank in 2019 and has since converted 70% of his cash into bitcoin.

Asked how reliable it is to keep wealth in an asset that lost 70% in the past year, Younes told CNBC that he is not too concerned about the price of BTC as he bought the coins at USD 20,000. He also said that the leading coin was selling for USD 3,500 three years ago.

Most Lebanese, however, trust tether (USDT), a stablecoin pegged to the US dollar. "We started by selling and buying USDT because the amount of demand for USDT is very high," admitted Abu Daher, the miner who is also offering crypto exchange services.

Although using cryptocurrency as a means of payment is illegal in Lebanon, an increasing number of businesses have begun to accept payments in the tether and other coins. "There’s a lot of coffee shops, restaurants, and electronics stores that accept USDT as a payment, so that’s convenient if I need to spend not in fiat but from my bitcoin savings," said Gebrael, the young architect who relies on crypto to fulfill his needs every month.