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Lebanon faces a foreign exchange crisis! Informal capital controls implemented, "Black Swan" author: Use cryptocurrency

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Lebanon faces a foreign exchange crisis! Informal capital controls implemented, "Black Swan" author: Use cryptocurrency

Due to the largest global economic recession in nearly a decade, Lebanon's already deteriorating economy is facing even more challenges. With the continuous inflation of the local currency, the adoption of Bitcoin in the country is on the rise, leading to a significant premium on Bitcoin in exchanges.

  • Bitcoin on P2P platforms in Lebanon is approaching $15,000
  • The country is experiencing its most severe economic crisis since 1990

Bitcoin Experiences Severe Premium

Lebanon's economy continues to suffer greatly, with the price of Bitcoin in the country nearly double the current exchange rate (BTC/USD) due to the impact of the COVID-19 pandemic.

According to the peer-to-peer Bitcoin trading platform LocalBitcoins.com, sellers are offering Bitcoin at a high price of 23.25 million LBP, approximately $15,000, while buyers are willing to pay as much as $11,000.

Source: localbitcoins

Lebanon is facing its most severe economic crisis in decades. On March 7, Prime Minister Hassan Diab announced the suspension of repayment of a $1.2 billion debt due on the 9th, ruling out assistance from the International Monetary Fund (IMF). This marks the country's first default on external debt, posing the largest crisis since the end of the civil war in 1990.

"Black Swan" Author: Use Cryptocurrency

It is reported that since October 2019, the Lebanese pound has depreciated by nearly 50% against the US dollar. With Lebanon implementing informal capital controls, the central bank allowed holders of US dollar accounts to withdraw the legal tender (LBP) before April 23 to ease the demand for dollars, leading to inflation and worsening social unrest.

In response, Nassim Nicholas Taleb, a Lebanese-American and renowned author of the best-selling book "The Black Swan," took to Twitter to suggest using Bitcoin and cryptocurrencies as a means of transferring funds.

However, Taleb does not agree with Lebanese people using Bitcoin as a store of value, stating:

Bitcoin is suitable for transfers to bypass the banking system, but not ideal for daily transactions. I don't think it can be used as a store of value because of its high volatility.