Lebanon’s *Potential* Bitcoin Adoption

Whenever my Lebanese friends and family approach me regarding Bitcoin, their first question is “How is Bitcoin doing right now?”, the second question is “Can I buy groceries and essentials with Bitcoin?” and the third one is “How do I buy Bitcoin?”. All these questions are valid and they stem from different concerns. People generally want to know about the soundness of Bitcoin. If Bitcoin has a good history of “doing well” in terms of value, they tend to build more trust in it, this perfectly explains the first question. Money is one thing for sure and that is a medium of exchange, people want to know that their money can be easily liquidated and accepted by the collective society and this is where the second question comes from. Lastly, the third question comes from limited access to Bitcoin education or Bitcoin advertisement in the country.

Ever since October 2019, Lebanese people have been consistently losing their wealth. Either because of the Lebanese pound’s never-ending devaluation against the dollar or because of the government atrocious dollar deposits confiscation and overall dreadful monetary policy in “dealing” with the crisis. Buying/Selling bitcoin via conventional ways, through international exchanges, was made impossible by the Lebanese central bank (Banque du Liban), so the only way Lebanese people could acquire Bitcoin is peer to peer transactions. You match with local sellers and they sell you their Bitcoins or you sell them yours for direct cash without a banking intermediary. This caused a problem for Bitcoin’s availability in Lebanon. The Lebanese have to deal with the local supply of Bitcoin in the country, matched by the local supply of fiat currencies (either LBP or USD). Considering Lebanese dreadful electricity and internet network situation mining might not be feasible or profitable for all. Unlike Venezuela or Iran, the one factor that might lead to increasing the Bitcoin supply in Lebanon is not Bitcoin mining, but diaspora remittances.

One of the dollar confiscation measures was the confiscation of remittances of the Lebanese diaspora to their relatives in the country. The central Bank would confiscate the dollars and exchange them for LBP at an artificial (lower than the market) exchange rate. This alone could drive the diaspora to start sending their remittances in Bitcoin and bypass the central bank, because Bitcoin is censorship resistant. Some would argue that the problem in such solution or the mass adoption of such solution is the local demand on Bitcoin being unable to support all the Bitcoins coming into the country. However, theoretically when Lebanese locals become more familiar with the technology as a whole, exchanging Bitcoin for dollars would no longer be an issue, as more merchants would start accepting Bitcoin payments as we saw in the examples of other undeveloped countries above. In turn, exchanging Bitcoin for dollars/LBP would become even more common and available at your next door Sarraf (Money Exchange owners). Sarrafin exchanging Bitcoin is the biggest step towards the mass adoption of Bitcoin in Lebanon. Bitcoin needs to become more easily redeemable in conventional currencies which can be used for grocery purchasing and other essentials.

Obviously, Bitcoin is useful for the Lebanese people because it is a hedge against the current failing financial system and the limitless devaluation of national money. Once Bitcoin becomes more widely accepted by the Lebanese population and as more people hold bitcoin, most will realize that holding bitcoin alone is profitable and it is even better to use it for saving rather than using dollars.