Lebanon's Economic Crisis Emphasizes Bitcoin's Limitations
November 21, 2019
When it comes to bitcoins, people in Lebanon are no longer allowed to send foreign currencies, whether dollars or euros, overseas.
Due to strict banking access and limited liquidity offered by established networks, most people in Lebanon are struggling to get their hands on bitcoins.
Ali Askar, who has been dealing with bitcoins for a very long time, told CoinDesk some Telegram and WhatsApp groups for local traders have nearly doubled over the past year.
One private group has grown to 300 members over the past weekend. Hearing the news of bank limitations, the Beirut car dealership Rkein Motors immediately started accepting bitcoin payments last week.
It's very clear, awareness is growing.
An absolute disconnection between daily users of bitcoins vs the rest of the population continues to grow in a region plagued by economic and political conflicts.
Who Really Has Access to Crypto In Lebanon?
Someone who remains a nameless bitcoin trader told CoinDesk that bitcoins will not help people it will only help politicians because they have so much money.
He uses a European bank to buy bitcoins then send them to people in Lebanon.
He added that bitcoins could help people if they are willing to stay at home with 24 hours' worth of internet and electricity. They could work from home online and get paid.
Unfortunately, that's a Utopian dream because in Lebanon the internet is very expensive. Electricity is not constant so, in many cases, its not available for hours on end.
Another big problem is access to bitcoins as most exchanges do not serve Lebanese people. Those in the know, are aware of the situation because of sanctions recently imposed against the Lebanese bank that has connections with the paramilitary group Hezbollah.
This has made crypto companies very wary about accepting transfers from any bank in Lebanon.
Another anonymous source who is a trader said it's like Iran, people and communities suffer from sanctions while the elite have alternatives and therefore business continues as usual.
Even more concerning, the prospective bitcoin users and the rate exchanges serving banks in Lebanon price bitcoins in dollars.
Due to the increased inflation of the Lebanese currency, buyers are offered a very small amount of bitcoins. The same enormous fees for local on-ramps apply to grassroots trades as well, manifesting as premiums rather than currency conversion rates.
There are a few local traders listed on LocalBitcoins that are working with a number of bitcoins worth more than $1,000 each. Unfortunately, due to the fact, there are very few people on the ground willing to sell bitcoins for cash, the traders are usually charged a 10% premium compared to the broader market.
In August, a Beirut bitcoin trader told CoinDesk there is a huge demand and supply for over-the-counter bitcoin transactions in Lebanon but the local environment was unable to support the needs of those who are less technical-savvy.
For instance, a Lebanese ex-pat Eli Kopay in Finland told CoinDesk his family was attempting to buy real estate when banks closed off international access. He is now in the process of teaching his family how to use crypto exchanges. Kopay said you can't send your own money overseas anymore.
They do not have bitcoins and his dad is old-fashioned and does not believe in bitcoins. On top of that, if you could purchase bitcoins it would cost way too much money.
Despite all these challenges, an anonymous trader is still telling Lebanese friends to find different ways to buy bitcoins. Unfortunately, they are very wary of the threat of stricter capital controls up ahead. Askar is more optimistic about the prospects of bitcoins in Lebanon.
He told CoinDesk the number of bitcoins being purchased is actually increasing on a daily basis. He is involved in many political round table discussions every night. The presence of bitcoin discussions is always brought up in one way or another.