How Crypto is Keeping the Lebanese Economy Afloat
The news of Lebanon’s economic crisis broke out last year. However, for many Lebanese people, the situation was much worse. The economy has continued to worsen, and many citizens can barely fend for themselves. For many, it seemed like the traditional financial system had failed yet again.
In many ways, the situation was quite similar to the 2008/2009 global economic crisis. This crisis led to the creation of Bitcoin. In the same way that Bitcoin helped to reduce the effects of the crisis, crypto has also been useful in reducing the impact of Lebanon’s economic crisis. In this article, we will explore how crypto has kept the Lebanese economy stable. However, before we get into that, a background on Lebanon’s economic crisis is needed.
The Lebanese Economic Crisis
Since 2019, Lebanon has battled a deep financial crisis. According to reports, the value of the Lebanon pound has reduced by more than 90 percent since the beginning of the crisis. As a result, many Lebanese have found it difficult to afford basic needs like food and healthcare.
The situation reached its peak on the 4th of April 2022. On this date, the Lebanese Deputy Prime Minister announced that Lebanon had gone bankrupt.
How Crypto Has Kept the Economy Afloat
Since the start of the economic crisis, crypto has been a way out for many Lebanese people. First, many citizens are now venturing into crypto trading as a way to earn sizeable profits in dollars. The value of the Lebanese pound (which is Lebanon’s official currency) has largely reduced since the crisis started. As such, it has become quite unprofitable for the Lebanese to earn and save on the Lebanese pound. There are reports of shops receiving USDT as payment for goods. Also, for individuals who have lost their livelihood due to economic challenges, crypto trading has offered a viable source of employment.
Crypto mining is another factor that has driven crypto’s influence in Lebanon. According to reports, many Lebanese are investing in heavyweight machines to conduct crypto mining. More mining rigs are being created, and mining installations are on the rise. In fact, due to the rising demand for mining installations, there are now more than 15 companies offering mining services in Lebanon.
While it is impressive that crypto has reduced the effects of Lebanon’s economic downturn for many of its citizens, some risks may arise. The risk of scams is the first. Many Lebanese people are desperate to get out of the economy and fend for themselves. As such, there is the possibility that many people may not carry out due diligence before deciding to invest in a cryptocurrency. This is dangerous, as many scams are disguised as crypto projects.
There is also the risk that Lebanon’s mining ecosystem may fall apart due to the country’s electricity problem. There are already reports of people abandoning their mining installations because the machines because of the persistent power outages. Considering that crypto mining offers a source of livelihood for many Lebanese, this is a major issue.
As the Lebanese government continues to find lasting solutions to the country’s economic crisis, the country needs to create a friendly environment for crypto investment. This will largely help in boosting the economy.