Bitcoin Adoption In Lebanon

Cedar wood is the oldest medium of exchange in Lebanon (The Cannaanite Era)

Introduction

When we look at how Bitcoin emerged in all different countries of the world, we realize that this emergence was always based on different unique needs. Even within one country people became interested in bitcoin for different reasons. As well as, our perception of why Bitcoin is important changed with time. PlanB in his S2FX article talks about all the different phases Bitcoin went through since its inception. In the early days of Bitcoin, Tech savvy professionals valued bitcoin as an E-Cash proof of concept, later on people started looking at it as a cheap payment network and it even gained a mild interest from the “dark net” criminals. In recent years people started looking at it as a censorship resistant store of value and an uncorrelated financial asset. Bitcoin proved to be resilient to all the political/economical uncertainties of the world. The following will be explaining the many unique factors that led people to look into the Bitcoin alternative.

The Developed World’s Bitcoin Adoption

Bitcoin is many different things to different people. As mentioned above people saw a unique need that pushed them towards adopting Bitcoin. Most early adopters of Bitcoin are people from developed countries due to many reasons, including better access to technology and a better information supply chain. Most of those “earlies” first learned about Bitcoin out of curiosity, especially those who are into technology. When Satoshi Nakamoto first released the white paper, many people with programming background could simply mine bitcoin blocks on their computers. All you needed back then was the know-how and a standard laptop. Therefore, the first criteria for Bitcoin adoption in developed countries was simply curiosity and availability of tech gadgets that allowed them to enter this world. When Bitcoin first acquired its dollar valuation, it gained popularity for those who are into the financial markets. Naturally, those people learned more about it. While part of them were encouraged to acquire Bitcoin just to speculate on it the rest were interested simply based on ideology. Being a limited supply, deflationary and censorship resistant type of money that could potentially overthrow the fiat system was definitely an overdue technology of the 21st century. Therefore, the second & third criteria for Bitcoin adoption were speculation on an asset with a big potential and pure ideology to end the oppressive fiat standard.

With time, more and more people learned about Bitcoin and as Bitcoin continued its appreciation journey from less than $1 for 1 Bitcoin to now $9k for 1 Bitcoin more people started getting into it. With mining difficulties increasing, mining became an even more exclusive job for the technology experts, as right now you need more than just a standard laptop to increase your chances of mining a Bitcoin block. You need some fairly expensive and highly technical hardware and constant maintenance to keep your mining operation running. Add to that, Bitcoin’s constant volatility brought even more day traders and speculators to it. Many traders made good money by simply trading on Bitcoin and trying to understand its technical trends. Moreover, while developed countries are being choked by the government’s clinginess to public welfare through even more currency devaluation and quantitative easing, the ideologues see an even bigger purpose in Bitcoin now and the failures of the current financial system is bringing even more of them to it.

The Underdeveloped World’s Bitcoin Adoption

The case is completely different for the underdeveloped countries. The adoption of Bitcoin in “The Third World” is not as apparent as it is in “The First World” because in opposition to the developed countries, the underdeveloped ones have less access to technology and the population there are less technological literate in general. Although many people in the so-called underdeveloped countries got into Bitcoin for the same reasons mentioned for the developed countries and based on the Bitcoin phases mentioned in the introduction, there are some unique factors that pushed people of the less fortunate countries to adopt the Bitcoin alternative. Here I will list a few of them.

Iran’s Adoption

Iran Licenses $7.3 Million Bitcoin Mining Enterprise

Amid US financial sanctions on Iran (Which is now of the biggest Bitcoin Mining countries in the world) and considering Iran’s highly technical and tech savvy population it was relatively easy for Iranians to adopt Bitcoin as a way to bypass the said sanctions. US sanctions include barring Iranian financial institutions from dealing with the U.S Financial system, aka using dollars and send bank transfers to foreign countries. However, the Iranian citizens were allowed to deal with the U.S. Financial system through foreign banks. Therefore, Bitcoin is now being used in Iran as a way to transfer wealth from Iran to the outside world and continue their unhampered trading. Normally, when a country’s access to the U.S. Financial system becomes limited its Dollar funds become limited as well. Considering national currencies are backed by the existence of U.S. Dollars in the system and the central bank reserves, the Iranian Rial saw a massive depreciation against the U.S. dollar. Hence, Bitcoin is now also being used by the Iranians as a store of value and a hedge asset. Bitcoin’s censorship resistance made it possible to be adopted by the Iranians and the Iranian perception towards it as an uncorrelated financial asset to the local political and economical uncertainties drove them to acquire it.

Venezuela’s Adoption

Venezuela is the cheapest country for Bitcoin Mining

Venezuela’s hyperinflation of the Bolivar is popular enough without any introductions. Of course, Venezuelans searched for alternatives, however Maduro’s confiscation of ‘hard’ currencies and precious metals left Venezuelans with little options. Considering the Electricity subsidy in Venezuela, mining bitcoin there became the cheapest in the world and Venezuelans saw a lot of profit in doing so. Moreover, with the Venezuelan government introducing the ‘Petro’, the national issued cryptocurrency, the authorities actively introduced the population to the concept of cryptocurrencies as a whole. Naturally, when people got introduced to crypto and considering no one really wanted to use the Petro in the first place, Venezuelans were driven to put their hands on the best cryptocurrency out there and arguably that is Bitcoin. With all that being said, Bitcoin is now the leading parallel currency in Venezuela.

Africa’s Adoption (Zimbabwe, South Africa, East Africa & Nigeria)

Within the continent of Africa many different countries adopted Bitcoin for many different reasons. In Zimbabwe, Bitcoin is a good alternative for the ever inflating Zollar. In South Africa, a relatively wealthy African country, Bitcoin’s usage has become as simple as retail transactions as it widely accepted all over the country. In East Africa, Bitcoin is being used as a cross border transaction tool. Lastly, Nigerians are using Bitcoin as a protest against the conventional monetary system that consistently failed them.

In Lebanon, an underdeveloped country, the financial restrictions, devaluation of fiat and the failures of national monetary policy only recently started being apparent. In a country full of political instabilities, this was bound to happen sooner rather than later. Therefore, Bitcoin adoption in Lebanon is highly likely right now more than ever, so here are the forces that only might drive the Lebanese population to enter the uncorrelated decentralized alternative world of Bitcoin.

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. (Check my article “Dollar Shortage? Let Them Eat Lira” for more on this). 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 them will realize that holding bitcoin alone is profitable and it is even better to use it for saving rather than using dollars.

The Limitations of Bitcoin Adoption in Lebanon

First thing that comes to mind when you think of why people are reluctant on adopting Bitcoin is technological illiteracy in underdeveloped countries generally and Lebanon specifically. Technological illiteracy in Lebanon is somehow not as common as it is in other underdeveloped countries but nonetheless it still exists. However, the solution for this is making Bitcoin as accessible as the Facebook app. In Lebanon even those who are completely out of touch with technology have a smartphone and a Facebook profile. They do not really need to understand how Facebook actually works, they just know that it does, and they value it because of this. Bitcoin as a user interface is being developed consistently and made more accessible after more than ten years since its inception. In the early days of Bitcoin, only those with technical programming capabilities were able to manage their bitcoins, but right now any person with a laptop or even a smartphone can have his or her own Bitcoin wallet and transact with it even easier than a bank credit card. Definitely this “user experience” will be enhanced even further and made accessible to the remote villagers and those who want to use Bitcoin for ends meet.

The second limitation is the people’s general skepticism towards a new technology. In a country filled with traditionalists, the Lebanese traditional ways are a blessing and a curse. My father is a traditionalist when it comes to his finances, he did not even deposit his savings in the bank. This was good for him as he was able to dodge the dollar confiscation bullet. In the same sense, when it comes to Bitcoin, he is afraid ‘’the money will be stolen somehow’’. However, I think with time as Bitcoin keeps on proving that it is a valuable form of money, people who are traditionalists or not will be forced to adopt Bitcoin. Bitcoin simply needs more time to prove that it works, more than ten years is not enough.

How to Acquire Bitcoin as A Lebanese Local & Other Lebanese Bitcoin Sources

Finally, it is important to guide the reader on how to buy and sell Bitcoin in Lebanon. As explained above, trading Bitcoin in Lebanon is so far not the easiest, as it is made difficult due to banking regulations/limitations. Trading Bitcoin can be done through meeting buyers and sellers. Localbitcoins.com is a website that matches local sellers with local buyers. You can either meet the seller/buyer and complete the trade face to face or you can send the money via OMT and other money transferring services. There is also https://www.bitcoinslebanon.com/ which is a Lebanese Bitcoin exchange website that accepts both LBP and USD for Bitcoin trading. https://bitcoinduliban.org/ is a good source for information about Bitcoin in Lebanon. You can also follow my medium page for regular articles about the subject matter.

Conclusion

Bitcoin is not a top down technology decreed by the authorities. It is not a one rule fits all type of concept. Bitcoin is perceived as a revolution, it is order, profit or simply an interesting technology, but most importantly Bitcoin can serve as a solution to some. Once Bitcoin proves its capability to solve a collective problem, this is exactly when mass adoption takes place. It is not that you want Bitcoin, it is more like you absolutely need it sometimes.

Bitcoin in Lebanon Diary

Hard Money, Bitcoin, Lebanon, Austrian Econ, History, Hodler