Bitcoin (BTC): The solution to hyperinflation in Lebanon?

It’s no secret. In recent years, Lebanon has experienced one of its most serious crises since the civil war of 1975-1990. The monetary and financial system that once made the country prosper has collapsed. Lebanon, which has long been considered the Switzerland of the Levant, is today facing a major crisis with many origins. One of the most impressive symptoms, and one of the major causes of the current unrest, is of course the hyperinflation that has hit the country. To deal with this, bitcoin (BTC) could be a possible solution.

Bitcoin (BTC) a parade against inflation

It’s an open secret. We all know that I believe in the potential of bitcoin. With its 21 million units, it is a new gold standard. One or digital somehow. Therefore, I believe in its ability to be a savings currency and more than that, a currency that can emancipate us from the large traditional issuers (FED, ECB, Bank of England, etc.) Through its decentralized nature, it allows to dispense with certain paper currencies which, in reality, do not have much more intrinsic value than BTC. If not less…

Generalized inflation

The current period is troubled. It does not seem to be able to release a clear future in which one could project oneself. This is why daring measures of course, but which make it possible to protect oneself, are in order. It is one opinion among others and in no way constitutes an authority. We know how much cryptocurrencies are decried. That aside, it is clear that the inflation crisis in Europe is caused by shortages due to restrictions during the Covid19 epidemic. Added to this is the sword of Damocles of a return of the pandemic, constantly announced in the media. And again, there is one last factor. The war in Ukraine and the sanctions against Russia. The price of gas, oil, and even electricity is likely to soar. The value of the currency would soar, if it were not artificially presented by the counterfeiters of the ECB. Who have printed millions and millions of tickets…

Gold round coins on a white surface

Bitcoin (BTC) is the solution for Lebanon, but not only

As previously explained, bitcoin can be a solution to rising inflation. In some countries, inflation has become hyperinflation. Argentina, which faces the same problem as Lebanon, has seen its people turn to cryptocurrency to save their savings. We in Europe, who are facing the same problem, but to a much lesser extent at the moment, think we are thinking about it. Lebanon has had a similar journey to our country. But in much more serious proportions. Economically, I mean. The country bet on the wrong horse, when it embarked on its banking policy and then paid the price. The end of the gold standard and the advent of high digital finance have been the executioners of the Lebanese system.

Lebanon a former banking success story

Indeed, the history of the reputation of the Lebanese bank goes back to the creation of the Lebanese state in 1943. Notably thanks to the once strict monetary policy of the central bank, the acquisition of enormous quantities of gold in the 20th century making Lebanon the third largest gold holding country per capita in the world and number one in the Middle East and North Africa. Or the law on bank secrecy which imitated the Swiss banking sector. This law then provided many wealthy individuals.

Corrupt government and Ponzi scheme

As said before, the French and Lebanese situation have a lot in common… In the early 2000s until the late 2010s, investors in the banking sector, known as depositors, were made by interest rates high. It was the scheme of the Lebanese state to revive its dying banking sector following the end of the gold standard and banking secrecy. Simply put, the formula was: the government sold high interest bonds to local banks through the central bank, the banks were able to compete with each other to develop more investors in their seller high interest rate deposits. Depositors were happy to participate in this scheme as long as they received the additional monies on time. While interest rates around the world were at or near zero, the Lebanese depositor was enjoying a whopping 10-15% on their deposits.

A bankrupt system and a serious crisis due to hyperinflation

At the end of 2019, it became certain that depositors would no longer receive their entire sale. Because the government was essentially unproductive and unable to repay the banks, the banks in turn were unable to repay their customers. With this reality looming, the central bank began printing money and reimbursing depositors accordingly, which caused the infamous hyperinflation in Lebanon. The Lebanese pound lost around 90% of its price against the US dollar. At the end of 2019, 1 dollar was equivalent to 1,500 Lebanese pounds. In May 2022, 1 dollar was worth 35,000 Lebanese pounds on the parallel market.

Faced with all these constraints, bitcoin almost imposed itself on the Lebanese. It offers peer-to-peer and borderless settlement worldwide, which could also be considered beneficial for the Lebanese citizen. It allows you to save and thus avoid inflation. But above all, for the Lebanese citizen, it is an opportunity to escape the constraint of financing a corrupt government and, in turn, to be able to directly benefit from the financing of a system that promotes the sovereignty of the country. ‘individual.

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Avatar Gregoire Morat

Gregory Morat

Student passionate about entrepreneurship and fascinated by the technologies behind cryptos! Yes, I am convinced that the two are intimately linked: blockchain and NFTs are revolutionizing many sectors and presenting unprecedented opportunities.

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