[2019-10-29] Lebanon’s Economic Crisis Highlights Bitcoin’s Limitations

[salamat700]

Lebanon is far from a poster child for cryptocurrency adoption. News of Lebanese banks shuttering to prevent a bank run was met with predictable enthusiasm from the global bitcoin commentariat. People in Lebanon can no longer send foreign currencies, mainly dollars and euros, abroad. Further, due to heavily restricted banking access and limited liquidity provided by established grassroots networks, most Lebanese civilians also struggle to acquire bitcoin.

“Bitcoin will not help the people. It will help the politicians because they are the filthy rich ones who have access to money,” one anonymous bitcoin trader with family in Lebanon told CoinDesk. He uses a European bank account to buy bitcoin, then sends it to people on the ground in Lebanon.

“It [bitcoin] could help them, perhaps, if they were sitting at home with 24 hours worth of electricity and internet, and they could work online to get paid for their online work. That’s a utopian scenario,” he added. “In Lebanon, the internet is very expensive. Electricity doesn’t come often. We sometimes have electricity for just six hours a day.”

Source: https://www.coindesk.com/how-lebanons-economic-crisis-highlights-bitcoins-limitations

I can feel that there is really a big potential for Bitcoin in Lebanon, it is just that there are factors that are beyond control. However, maybe if the problem in Lebanon will escalate for a longer period of time, people will gradually be starting to take notice of the real and full potential of Bitcoin to be a tool that can help them.

What do you think, guys?

[bbc.reporter]

You cannot argue that there are limits, however, you also cannot argue that bitcoin is created for payments that can breakdown borders. Lebanon's problem is political and infrastructural, you cannot expect the cryptospace to save the Lebanese from all of the world's fundamental problems.

[magneto]

“Bitcoin will not help the people. It will help the politicians because they are the filthy rich ones who have access to money,” one anonymous bitcoin trader with family in Lebanon told CoinDesk. He uses a European bank account to buy bitcoin, then sends it to people on the ground in Lebanon.

“It [bitcoin] could help them, perhaps, if they were sitting at home with 24 hours worth of electricity and internet, and they could work online to get paid for their online work. That’s a utopian scenario,” he added. “In Lebanon, the internet is very expensive. Electricity doesn’t come often. We sometimes have electricity for just six hours a day.”

Sure, perhaps it will help the rich as well, even potentially to a greater extent than the unbanked.

However, does that mean that BTC has no use to the unbanked and underbanked internationally? I don't personally perceive that as a valid argument - just because it may benefit another group doesn't mean that the grassroot adopters can't be helped.

Besides, there are services that have started long ago that allow people to store BTC without any internet connection. It's a matter of adoption.

[Kakmakr]

Let's not blame Bitcoin for the limitations and restrictions that Banks are creating for Bitcoin.     Banks and corrupt governments will go out of their way to make Bitcoin use impossible and we have seen how legislation are used to slow Bitcoin down. I said "slow it down" on purpose, because you cannot stop it. 

Electricity might be a problem, but when it is available, people should charge their phones and do the transactions when the phones are charged. People in Africa has been doing this with M-Pesa for years and they find ways to manage this limitation. < They use generators, small solar panels etc.> 

[1Referee]

Click-bait headline.

I expected to read about "high" fees and whatnot as they were referring to Bitcoin's limitations, but all I read about was how sucky that country's infrastructure itself is.

Very poor journalism. I expect this from CoinIdol, but Coindesk seems to have followed the same path of publishing nonsense just for the sake generating content volume.

[Kyraishi]

Well, it's hard to try and compare bitcoin to like Robin Hood, because even though it's meant to be a currency that allows everyone to be free and manage their own money, the only people who are able to actually invest in it and get a decent amount of it would be the filthy rich and politicians.

There are definitely ways for someone to hold BTC without having access to the internet a lot (greenaddress and paper wallets come to mind), but it's going to be no point because the people that are living paycheck to paycheck won't be able to invest any money in BTC.

[pjcaruci]

Lebanon can solve many of its problems with the help of crypto and blockchain technologies

[buwaytress]

I'm pretty sure a national economic crisis highlights fiat's limitations, not Bitcoin.

I mean sure, Bitcoin has limitations -- but what would you like to compare it to?

1. Gold? Sure, try storing gold and see if people don't start robbing you.
2. Fiat? Try see how much your fiat buys you today, tomorrow, and next week.
3. One of those altcoins purporting to support broken economies like Dash? What happens when the devs and companies stop marketing it?

I never agreed economic crises would push Bitcoin to the fore anyway. People need to eat when money's an issue. Not buy Bitcoin.

But Bitcoin certainly provides avenues for transfers, for independence, for storing value securely. It's not pretended to be much more than that.

[cr1776]

Bitcoin won't help people who won't help themselves. Instead of complaining about someone - "the rich" - take action and do something. Given how divisible bitcoin is, anyone can use it.

However, trying to use bitcoin after you are already enmeshed in a crisis is kind of like trying to buy fire insurance when your home is already on fire.  This isn't bitcoin's fault, it is the fault of the person who didn't plan ahead.

There isn't a country in the world where the politicians aren't willing to sell everyone's liberty down the river for their own power.  They push envy in the promise of "free" stuff to sell their agenda so everyone with any sense should prepare now, instead of when the house is on fire.

 Look at Chile, they are on the road to Venezuela. Smart people there should be moving money offshore and buying bitcoin if they don't have the ability to move other things out of the country.

[hugeblack]

Let's divide the discussion into two parts (the first relates to Bitcoin as a network and the second as a currency):

Bitcoin breaks the border where anyone in the world can send money to and from Lebanon.
Using banks can’t happen at the moment "because of the popular revolution^[*]" and the banking constraints associated with political problems.


The Lebanese currency (Lebanese pound) has largely collapsed due to excessive inflation and corruption, which has gradually eroded the value of the currency against the dollar. On the contrary, bitcoin is fluctuating against the dollar and rising in the long term.

[*] Banks have been closed for several days and may continue due to demonstrations.

[Harlot]

Definitely not a limitatiom for Bitcoin but the limitation for the country and their citizens itself. You cannot blame the technology and the asset on why they aren't able to acquire it in the first place, it's like blaming their cellphone on why it doesn't provide free internet. The way I see it is if people really do wanna earn Bitcoin they will find a way to do so because I doubt that people below the poverty line are even interested to buy one or even if they know BTC in the first place.

[bbc.reporter]

Click-bait headline.

I expected to read about "high" fees and whatnot as they were referring to Bitcoin's limitations, but all I read about was how sucky that country's infrastructure itself is.

Very poor journalism. I expect this from CoinIdol, but Coindesk seems to have followed the same path of publishing nonsense just for the sake generating content volume.

It is alright to highlight bitcoin's limits because of a country's infrastructural problems. However, this criticism if coming from a belief that bitcoin is supposed to be the savior of the world is a mistake.

[stompix]

The Lebanese currency (Lebanese pound) has largely collapsed due to excessive inflation and corruption, which has gradually eroded the value of the currency against the dollar.

Nope, it didn't.

The Lebanese pound is pegged at 1500 LBP for 1$ since 1997.

[hatshepsut93]

If a country has problems with banks, people start switching to cash. So, unless there's some hyperinflation going on, cash is better than Bitcoin, since you don't need electricity and internet connection to use it, and it's already widespread. Bitcoin could be useful for international transactions in those countries, but majority of people don't need them.

It [bitcoin] could help them, perhaps, if they were sitting at home with 24 hours worth of electricity and internet, and they could work online to get paid for their online work.

I've recently made a thread about how hard it is to find online work that pays in Bitcoin.

[hello_good_sir]

Let's divide the discussion into two parts (the first relates to Bitcoin as a network and the second as a currency):

Good idea.

I'm pretty sure a national economic crisis highlights fiat's limitations, not Bitcoin.

I mean sure, Bitcoin has limitations -- but what would you like to compare it to?

1. Gold? Sure, try storing gold and see if people don't start robbing you.
2. Fiat? Try see how much your fiat buys you today, tomorrow, and next week.
3. One of those altcoins purporting to support broken economies like Dash? What happens when the devs and companies stop marketing it?

I never agreed economic crises would push Bitcoin to the fore anyway. People need to eat when money's an issue. Not buy Bitcoin.

But Bitcoin certainly provides avenues for transfers, for independence, for storing value securely. It's not pretended to be much more than that.

I've never liked it when people would look at financial crises and then directly relate them to crypto-currency as if they were able to fix them. Crypto-currency has only ever been a secondary payment method and a possible storage tool for capital, but if the market eventually goes to shit, people are going to be looking at getting the essentials, not buying BTC, and we'll likely see a BTC crash since a lot of the users would be cashing out for the essentials, not keeping their money in a speculative currency - although this is a pretty extreme example of a market crash.

If a country has problems with banks, people start switching to cash. So, unless there's some hyperinflation going on, cash is better than Bitcoin, since you don't need electricity and internet connection to use it, and it's already widespread. Bitcoin could be useful for international transactions in those countries, but majority of people don't need them.

It [bitcoin] could help them, perhaps, if they were sitting at home with 24 hours worth of electricity and internet, and they could work online to get paid for their online work.

I've recently made a thread about how hard it is to find online work that pays in Bitcoin.

This is also pretty true in most advanced currencies, a lot of the people in struggling economies are known to keep a large amount of cash to spend and use in the case.

[1Referee]

It is alright to highlight bitcoin's limits because of a country's infrastructural problems.

I don't think it's alright.

It's like saying that Bitcoin is limited because you don't have electricity or an internet connection to transact. It only highlights the limitations of your local electricity provider's network and your ISP.

However, this criticism if coming from a belief that bitcoin is supposed to be the savior of the world is a mistake.

That's something you can blame news outlets for. Even if Bitcoin could be the savior of the world as you state it, then it's still up to the people to make the best of it. From what I have seen, people are not capable of seeing the value of Bitcoin and therefore they will not help themselves or their environment.

Only a few have enough sense in them to buy into Bitcoin before things in their country escalate for the worse.

[error08]

When most exchanges don’t serve a country's users, it makes it difficult for them to purchase bitcoin.
Since Lebanese banks shuttering and inflation problems, bitcoin becomes a way to send funds without banking services.
But the internet and electricity limitations make it worse, furthermore, traders charge 10% fees to convert bitcoin into cash.
In this case, better to keep bitcoin instead of cash when there is political and economic instability.

[CryptoBry]

When most exchanges don’t serve a country's users, it makes it difficult for them to purchase bitcoin. Since Lebanese banks shuttering and inflation problems, bitcoin becomes a way to send funds without banking services. But the internet and electricity limitations make it worse, furthermore, traders charge 10% fees to convert bitcoin into cash. In this case, better to keep bitcoin instead of cash when there is political and economic instability.

I live in an Asian country whose government is quite open to the innovations and benefits of cryptocurrency hence it is not that hard to get hold of Bitcoin here in my place. I am surely sympathetic with people who are facing difficulties to be a part of the Bitcoin bandwagon, just like what many Lebanese are experiencing.

However, in every crisis there are opportunities sprouting so am sure that soon there will be enterprising people who can provide the financial and cryptocurrency services people can be looking for. We can not expect Bitcoin to be the be-all solution to a country's ills and problems but Bitcoin can be a tool for people to protect their wealth and transact business in and out of the country with some ease.

[Carlton Banks]

The Lebanese currency (Lebanese pound) has largely collapsed due to excessive inflation and corruption, which has gradually eroded the value of the currency against the dollar.

Nope, it didn't.

The Lebanese pound is pegged at 1500 LBP for 1$ since 1997.

did the dollar peg not fail in the black market recently? it's hard to tell, we're relying alot on hearsay from Lebanese people living this situation, but I've heard that the LBP/USD peg is meaningless now when doing cash business in a free market

[stompix]

~

did the dollar peg not fail in the black market recently? it's hard to tell, we're relying alot on hearsay from Lebanese people living this situation, but I've heard that the LBP/USD peg is meaningless now when doing cash business in a free market

For a moment I thought I made a boo-boo but it seems that the so-called black rate is between 1580 and 1600 so although indeed a bit devalued it 's nothing that would be regarded as collapsed Venezuela style.
And browsing through the news it seems that they are committed to trying to keep this rate, although I'm not so sure it's the best idea.

Anyhow it's a country that was unlucky, if they would have been on an island far away from the middle east they would be doing ok, but...