TL; DR failure
- Lebanon’s economy is heading towards severe inflation
- Bitcoin replaced the Lebanese banking system
- Bitcoin mining in Lebanon
Lebanese citizens explain how Bitcoin mining has replaced a broken banking system as the economy spirals into hyperinflation and the nation and banks impose severe haircuts on dollar withdrawals. Locals are now mining Bitcoin and using Tether to pay for goods, as $1 is now only worth 15 cents.
Lebanon was known for having a reliable and welcoming banking system for investment. This was to meet the growing demand for its citizens seeking financial freedom. Lebanon partnered with Bitcoin mining businesses, sellers, and online trainers.
According to Mark Iskandar, who is the founder and CEO of Beirut-based cryptocurrency mining company Magma, the first Bitcoin ATM in Lebanon has been launched on Hamra Street in the capital Beirut, and a second machine is on the way.
Lebanon is facing a financial crisis
In 2016, Giorgio Abu Gabriel, a local architect, first heard about Bitcoin and thought it was a scam. In 2019, Lebanon was experiencing a financial crisis that led to the closure of banks and local residents were exempted from withdrawing their funds from banks.
When Gabriel got paid for his architecture job, he used the money to buy small bitcoins. Gabriel now earns 50% of his income from freelance work, 90% of which is paid in Bitcoin. The other half is a salary in US dollars offered by his new architecture firm. Besides being an easy way to make a living, Bitcoin has become his bank.
Bitcoin mining in Lebanon
Many see this country as a failing country with a weak and inefficient central administration. The collapse of the banking sector is one of its biggest problems at the moment. It makes it difficult for Lebanese residents to access money and buy essentials such as food.
In such a scenario, the private nature of digital currency is very attractive. In the affluent areas of Beirut, over-the-counter traders act as extensions of informal money-changing networks, or “remittance networks,” that can receive cash and exchange it for digital currencies stored in digital wallets and On the contrary
The only steps involved in buying and selling USD Tether to USD are installing a mobile app and providing contact information for a third party to handle the transaction. Not only in Lebanon, but people around the world have turned to digital currencies during periods of hyperinflation.
As a result, Lebanese law does not prohibit the ownership, use or trading of digital currency. But when it comes to accepting them as a payment method, regulations only accept fiat currencies, which are recognized as legal tender.
What should be done during severe inflation?
When the prices of goods and services increase at a monthly rate of 50 percent or an annual rate of 1,000 percent or more, these are signs that inflation is out of control. Hyperinflation can be caused by an excessive supply of paper currency without increasing the production of goods and services. In a period of hyperinflation, those who have savings in banks or other financial institutions denominated in local paper currency can A rapid decline in the real value of their savings. However, physical assets such as land, plants and machinery do not lose value. People who panic tend to withdraw their funds from banks, which leads to a Bank executiveworst case scenario
When purchasing power evaporates, it is gone forever. you are betterGo ahead with major purchases sooner rather than later in hyperinflationBecause if you don’t, those things will become more unattainable over time. This is not investment advice, but something for those with large savings to think about later. Also read tips on converting your cash.