In bankrupt Lebanon, locals mine bitcoin and buy groceries with tether #bankrupt #Lebanon #locals #bitcoin #buy #groceries #tetherNews Headlines
Aerial view during landing of the seafront Manara district near downtown Beirut.
Bilwander | Getty Images
When Georgio Abou Gebrael first heard about bitcoin in 2016, it sounded like a scam.
But by 2019, as Lebanon plunged into a financial crisis following decades of expensive wars and bad spending decisions, a decentralized and borderless digital currency operating outside the reach of bankers and politicians sounded a lot like salvation.
Gebrael was an architect living in his hometown of Beit Mery, a village eleven miles due east of Beirut. He had lost his job and needed to figure out another way to quickly get ahold of cash. In the spring of 2020, Gebrael says, the banks were closed and locals were barred from withdrawing money from their accounts. Receiving cash via international wire transfer wasn’t a great option either, since these services would take U.S. dollars from the sender and give Lebanese pounds to the recipient at a much lower rate than market value, according to the 27-year-old.
“I would lose around half of the value,” explained Gebrael of the experience. “That’s why I was looking at bitcoin – it was a good way to get money from abroad.”
Gebrael discovered a subreddit dedicated to connecting freelancers with employers willing to pay in bitcoin. The architect’s first job was to film a short commercial for a company that sold tires. Gebrael was paid $5 in bitcoin. Despite the tiny amount, he was hooked.
Georgio Abou Gebrael filming a short commercial for a company that sold tires.
Georgio Abou Gebrael
Today, half of Gebrael’s income is from freelance work, 90% of which is paid in bitcoin. The other half comes from a U.S. dollar-denominated salary paid by his new architecture firm. Beyond being a convenient way to earn a living, bitcoin has also become his bank.
“When I get paid from my architecture job, I withdraw all my money,” continued Gebrael. He then uses that cash to buy small amounts of bitcoin every Saturday. The rest he keeps as spending money for daily needs and home renovations.
Gebrael isn’t alone in seeking alternative ways to earn, save, and spend money in Lebanon – a country whose banking system is fundamentally broken after decades of mismanagement. The local currency has lost more than 95% of its value since Aug. 2019, the minimum wage has effectively plummeted from $450 to $17 a month, pensions are virtually worthless, Lebanon’s triple-digit inflation rate is expected to be second only to Sudan this year, and bank account balances are just numbers on paper.
“Not everyone believes that the banks are bankrupt, but the reality is that they are,” said Ray Hindi, CEO of a Zurich-based management firm dedicated to digital assets.
“The situation hasn’t really changed since 2019. Banks limited withdrawals, and those deposits became IOUs. You could have taken out your money with a 15% haircut, then 35%, and today, we’re at 85%,” continued Hindi, who was born and raised in Lebanon before leaving at the age of 19.
“Still, people look at their bank statements and believe that they’re going to be made whole at some point,” he said.
Despite losing nearly all of their savings and pension, Gebrael’s parents – both of whom are career government employees – are holding out hope that the existing financial system will rightsize at some point. In the meantime, Gebrael is covering the difference.
Others have lost faith in the monetary system altogether. Enter cryptocurrency.
CNBC spoke with multiple locals, many of whom consider cryptocurrencies a lifeline for survival. Some are mining for digital tokens as their sole source of income while they hunt for a job. Others arrange clandestine meetings via Telegram to swap the stablecoin tether for U.S. dollars in order to buy groceries. Although the form that crypto adoption takes varies depending upon the person and the circumstances, nearly all of these locals craved a connection to money that actually makes sense.
“Bitcoin has really given us hope,” Gebrael said. “I was born in my village, I’ve lived here my whole life, and bitcoin has helped me to stay here.”
General view of Beirut, Lebanon in 1956.
Bettmann | Lebanon League of Progress | Getty Images
Between the end of the second World War and the start of Lebanon’s civil war in 1975, Beirut was in its golden age, earning it the title of “the Paris of the Middle East.” The world’s elite flocked to the Lebanese capital, which boasted a sizable Francophone population, Mediterranean seaside cafes, and a banking sector known for its resilience and emphasis on secrecy.
Even after the brutal 15-year civil war ended in 1990, Lebanon competed with offshore banking jurisdictions such as Switzerland and the Cayman Islands as an ideal destination for the rich to park their cash. Lebanese banks offered both a certain degree of anonymity and interest rates ranging from highs of 15% to 31% on U.S. dollars, according to one estimate shared by Dan Azzi, an economist and former CEO of the Lebanese subsidiary of Standard Chartered Bank. In return, Lebanon drew in the foreign currencies that it so desperately needed to re-stock its coffers after the civil war.
There were strings attached. Some banks, for example, had a lock-up window of three years and steep minimum balance requirements. But for a while, the system worked pretty well for everyone involved. The banks got an influx of cash, depositors saw their balances swiftly grow, and the government went on an undisciplined spending spree with the money it borrowed from the banks. The mirage of easy money was further reinforced by the government putting some of that borrowed cash toward maintaining a fixed exchange rate for deposit inflows at an overvalued peg.
Tourism and international aid, plus foreign direct investment from oil-rich Gulf states, also went a long way toward shoring up the balance sheet of the central bank, Banque du Liban. The country’s brain drain and the subsequent boom in remittance payments sent home by the Lebanese diaspora injected dollars as well.
World Bank data shows remittances as a percentage of gross domestic product peaked at more than 26% in 2004, though it stayed high through the 2008 global financial crisis. Those payments, however, began to slow through the 2010s amid unrest throughout the region, and the growing prominence of Hezbollah – an Iranian-backed, Shiite political party and militant group – in Lebanon alienated some of the country’s biggest donors.
A vandalized ATM in Beirut, Lebanon.
Anwar Amro | AFP | Getty Images
Meanwhile, as the government splurged to try and rebuild from the civil war, the government’s budget deficit plunged further into the red, and its imports have far outstripped its exports for years.
To try to stave off a total economic meltdown, in 2016, central bank chief Riad Salameh, an ex-Merrill Lynch banker who had been on the job since the early 1990s, decided to dial up banking incentives. People willing to deposit U.S. dollars earned astronomical interest on their money, which proved especially compelling at a time when returns elsewhere in the world were relatively underwhelming. El Chamaa tells CNBC that those who deposited U.S. dollars and then converted those dollars to Lebanese lira earned the highest interest.
The era of easy money fell off a cliff in October 2019, when the government proposed a flurry of taxation on everything from gas, to tobacco, to WhatsApp calls. People took to the streets in what became known as the October 17 Revolution.
As the masses revolted, the government defaulted on its sovereign debt for the first time ever in early 2020, just as the Covid pandemic took hold around the world. Making a terrible situation worse, in Aug. 2020, an explosion of a stockpile of ammonium nitrate stored at the port in Beirut – blamed on gross government negligence – killed more than 200 people and cost the city billions of dollars in damages.
Anti-government protesters take part in a demonstration against the political elites and the government, in Beirut, Lebanon, on August 8, 2020 after the massive explosion at the Port of Beirut.
STR | NurPhoto via Getty Images
The banks, spooked by all the chaos, first limited withdrawals and then shut their doors entirely as much of the world descended into lockdown. Hyperinflation took root. The local currency, which had a peg of 1,500 Lebanese pounds to $1 for 25 years, depreciated to a street rate of around 40,000 pounds to $1.
“You need a backpack to go for lunch with a group of people,” explained Hindi.
After re-opening, the banks refused to keep up with this extreme depreciation, and offered much lower exchange rates for U.S. dollars than they were worth on the open market. So money in the bank was suddenly worth much less.
Azzi dubbed this new form of money “lollars,” referring to U.S. dollars deposited into the Lebanese banking system before 2019. Today, withdrawals of lollars are capped, and each lollar is paid out at a rate worth about 15% of its actual value, according to estimates from multiple locals and experts living across Lebanon.
Meanwhile, banks still offer the full market-rate exchange rate for U.S. dollars deposited after 2019. These are now known colloquially as “fresh dollars.”
For many Lebanese, this was the point at which money just stopped making sense.
“I send actual dollars from my dollar account in Switzerland to my dad’s Lebanese account,” Hindi told CNBC. “They count as fresh dollars because it came from abroad, but of course, my dad is running counterparty risk with the bank.”
Mohamad El Chamaa, a 27-year-old Beirut-based journalist at L’Orient Today tells CNBC that when the bank began instituting these restrictions, he had $3,000 in his savings account from odd jobs he did in grad school.
“One of my life’s regrets was not withdrawing my money in full before the crisis hit,” said El Chamaa, who is studying for a Masters in Urban Planning at the American University of Beirut. “I could see the writing on the wall, because the bank started charging me a small percentage for every dollar withdrawal I made a month before the crisis hit, which I thought was kind of odd.”
El Chamaa says that he has since grown accustomed to withdrawing money from his bank account at a “bad rate” of 10% to 15% of its original worth, but “there is no way in hell” he would ever deposit cash in a Lebanese bank ever again. Instead, he keeps what remains of his life savings in cash and just uses his bank account to pay for his iCloud service and music streaming account.
An exchange dealer shows money at a currency exchange office as the value of the Lebanese currency against the US dollar continues to drop. The Lebanese currency on Tuesday sank to a new low on the black market as the exchange rate of one U.S. dollar has reached 30,000 Lebanese lira.
Houssam Shbaro | Anadolu Agency | Getty Images
Access to his account is spotty. The banks closed again in September, and there are daily nationwide power cuts, which translate to limited ATM access.
Bank heists in which locals demand money from their personal accounts by force are the new norm. Some have brandished a toy gun and a hunting rifle, while others have taken hostages in an effort to access their savings to pay hospital bills. The assailants include a Member of the Lebanese Parliament who demanded her frozen savings for medical expenses and a former Lebanese ambassador.
“It gets worse over time, but the fundamentals have been bad since 2019. They haven’t changed that much,” said Hindi.
The World Bank says Lebanon’s economic and financial crisis is among the worst it’s seen anywhere on the planet since the 1850s. The United Nations estimates that 78% of the Lebanese population has now fallen below the poverty line.
Goldman Sachs analysts estimate losses at the local banks are around $65 billion to $70 billion – a figure that is four times the country’s entire GDP. Fitch projects inflation rising to 178% this year – worse than in both Venezuela and Zimbabwe – and there are conflicting messages from the government’s top brass as to whether the country is officially bankrupt.
The International Monetary Fund is in talks with Lebanon to put a big bandaid over the whole mess. The global lender is considering extending a $3 billion lifeline – with a lot of conditions attached. Meanwhile, there is a power vacuum as Parliament keeps trying and failing to elect a president.
Demonstrator looks on as Lebanese policemen stand guard outside the Central Bank in Dec. 2018.
Anwar Amro | AFP | Getty Images
A little over two years ago, Ahmad Abu Daher and his friend began mining ether with three machines running on hydroelectric power in Zaarouriyeh, a town 30 miles south of Beirut in the Chouf Mountains.
At the time, ethereum — the blockchain underpinning the ether token — operated on a proof-of-work model, in which miners around the world would run high-powered computers that crunched math equations in order to validate transactions and simultaneously create new tokens. This is how the bitcoin network is still secured today.
The process requires expensive equipment, some technical know-how, and a lot of electricity. Because miners at scale compete in a low-margin industry, where their only variable cost is energy, they are driven to migrate to the world’s cheapest sources of power.
Abu Daher taps into a hydropower project which harnesses electricity from the 90-mile Litani River that cuts across southern Lebanon. He says he is getting 20 hours a day of electricity at old pre-inflationary rates.
“So basically, we are paying very cheap electricity, and we are getting fresh dollars through mining,” continued Abu Daher.
Ahmad Abu Daher and his friend began mining ether with three machines running on hydroelectric power in Zaarouriyeh, a town 30 miles south of Beirut in the Chouf Mountains. Abu Daher has since scaled his business to thousands of machines spread across Lebanon.
Ahmad Abu Daher
When 22-year-old Abu Daher saw that his mining venture was profitable, he and his friend expanded the operation.
They built their own farm with rigs acquired at fire sale prices from miners in China and began re-selling and repairing mining equipment for others. They also started to host rigs for people living across Lebanon, who needed stable money but lacked the technical expertise, as well as the access to cheap and steady electricity — a highly coveted commodity in a country with crippling electricity blackouts. Abu Daher also has customers outside of Lebanon, in Syria, Turkey, France, and the United Kingdom.
It has been 26 months since they first set up shop, and business is thriving, according to Abu Daher. He says that he had profits of $20,000 in September — half from mining, half from selling machines and trading in crypto.
The government, facing electrical shortages, is trying to crack down.
In Jan., police raided a small crypto mining farm in the hydro-powered town of Jezzine, seizing and dismantling mining rigs in the process. Soon after, the Litani River Authority, which oversees the country’s hydroelectric sites, reportedly said that “energy intensive cryptomining” was “straining its resources and draining electricity.”
But Abu Daher tells CNBC he is neither worried about being raided — nor the government’s proposal to hike up the price of electricity.
AntMiner L3++ miners running at one of Ahmad Abu Daher’s crypto farms in Mghayriyeh in the Chouf Mountains.
Ahmad Abu Daher
“We had some meetings with the police, and we don’t have any problems with them, because we are taking legal electricity, and we are not affecting the infrastructure,” he said.
Whereas Abu Daher says that he has set up a meter that officially tracks how much energy his machines have consumed, other miners have allegedly hitched their rigs to the grid illegally and are not paying for power.
“Basically, a lot of other persons are having some issues, because they are not paying for electricity, and they are affecting the infrastructure,” he said.
Rawad El Hajj, a 27-year-old with a marketing degree, found out about Abu Daher’s mining operation three years ago through his brother.
“We started because there is not enough work in Lebanon,” El Hajj said of his motivation to jump into mining.
El Hajj, who lives south of the capital in a city called Barja, started small, purchasing two miners to start.
“Then every month, we started to go bigger and bigger,” El Hajj told CNBC.
Rawad El Hajj, a 27-year-old with a marketing degree, tells CNBC that his 11 machines mine for litecoin and dogecoin.
Rawad El Hajj
Because of the distance to Abu Daher’s farms, El Hajj pays to outsource the work of hosting and maintaining the rigs. He tells CNBC that his 11 machines mine for litecoin and dogecoin, which collectively bring in the equivalent of about .02 bitcoin a month, or $426.
It’s a similar story for Salah Al Zaatare, an architect living 20 minutes south of El Hajj in the coastal city of Sidon. Al Zaatare tells CNBC that he began mining dogecoin and litecoin in March of this year to augment his income. He now has 10 machines that he keeps with Abu Daher. Al Zaatare’s machines are newer models so he pulls in more than El Hajj — about $8,500 a month.
Al Zaatare pulled all of his money out of the bank before the crisis hit in 2019, and he held onto that cash until deciding to invest his life savings into mining equipment last year.
“I got into it, because I think it will become a good investment for the future,” Al Zaatare told CNBC.
Official government data shows that just 3% of those earning a living in Lebanon are paid in a foreign currency such as the U.S. dollar, so mining offers a rare opportunity to get ahold of fresh dollars.
“If you can get the machine, and you get the power, you get the money,” said Nicholas Shafer, a University of Oxford academic studying Lebanon’s crypto mining industry.
Abu Daher, who graduated from the American University of Beirut six months ago, has also been experimenting with other ways to get more use out of crypto mining. As part of his year-end project at university, he designed a system to harness the heat from the miners as a means to keep homes and hospitals warm during the winter months.
But mining crypto tokens to earn a living is not for everybody.
Gebrael considered it, but ultimately, the cost of buying gear, plus paying for electricity, cooling, and maintenance seemed like a roundabout way of getting what he wanted.
“It’s easier to just buy bitcoin,” he said.
AntMiner L3++ miners running at one of Ahmad Abu Daher’s crypto farms in his village of Zaarouriyeh.
Ahmad Abu Daher
When Gebrael needs cash to pay for groceries and other basics, he first uses a service called FixedFloat to swap some of the bitcoin he has earned through his freelance work for tether (also known as USDT), a stablecoin that is pegged to the U.S. dollar. After that, he goes to one of two Telegram groups to arrange a trade of tether for U.S. dollars. While tether does not offer the same potential for appreciation as other cryptocurrencies, it represents something more important: a currency that Lebanese still trust.
Each week, Gebrael finds someone willing to make the swap, and they set up an in-person meeting. Because he is often making the trade with a stranger, Gebrael typically chooses public spaces, like a coffee shop, or the ground floor of a residential building.
“One time I was scared because it was at night and the person I contacted asked me to go up to their apartment,” Gebrael said of one hand-off. “I asked them to come meet me on the street, and it all went fine. I try to stay as safe as possible.”
These kinds of backchannels have become a critical lifeline to fresh dollars, which are vital in Lebanon’s mostly-cash economy.
“It’s easy here to get cash from crypto,” said El Hajj of his experience. “There’s a lot of guys that exchange USDT for cash.”
Exchanges over the Telegram group that Gebrael uses range from $30 to trades in the hundreds of thousands of dollars.
In addition to Telegram, a network of over-the-counter traders specialize in swapping several different types of fiat currencies for cryptocurrencies. The model bears resemblance to the centuries-old hawala system – which facilitates cross-border transactions via a sophisticated network of money exchangers and personal contacts.
Lebanese anti-government protesters seal an ATM with tape in Beirut during a rally against the banking system on November 11, 2019.
Patrick Baz | AFP | Getty Images
Abu Daher offers exchange services in tandem with his mining business, and charges a 1% commission fee to both of the parties participating in the trade.
“We started by selling and buying USDT because the amount of demand on USDT is very high,” said Abu Daher, who added that he was “shocked” at the flood of inbounds for his service.
Some people are tinkering with covering their daily expenses in tether directly to avoid either paying commissions to crypto exchangers — or having to go through the motions of setting up an informal trade with a stranger.
A man stands outside a currency exchange booth in the Lebanese capital on October 1, 2019.
Joseph Eid | AFP | Getty Images
Even though accepting crypto as a payment method is prohibited under Lebanese law, businesses are actively advertising that they accept crypto payments on Instagram and other social media platforms.
“The use of USDT is widespread. There’s a lot of coffee shops, restaurants, and electronics stores that accept USDT as a payment, so that’s convenient if I need to spend not in fiat, but from my bitcoin savings,” explained Gebrael. “The government has much bigger problems right now than to worry about some stores accepting cryptocurrency.”
Local businesses in the Chouf region have also begun to accept crypto payments amid the rise of mining farms, according to El Chamaa. In Sidon, the 26-year-old owner of a restaurant called Jawad Snack says that around 30% of his transactions are in crypto, according to written comments translated by Abu Daher and shared with CNBC via WhatsApp.
“It’s better for me to accept tether or U.S. dollars due to the huge inflation in the Lebanese lira,” continued the owner, who added that once he is paid in tether, he cashes it out to fiat through a trader in the black market. He says he typically uses Abu Daher for this, since he lives the closest.
Abu Daher uses tether to pay for imported machines, but he still has to cover a lot of his expenses in the Lebanese lira (electricity, internet fees, and rent), as well as in U.S. dollars (cooling systems and security systems).
Some hotels and tourism agencies accept tether, as does at least one auto mechanic living in Sidon.
Detailed administrative and political vector map of Lebanon.
Indeed, new research from blockchain data firm Chainalysis shows that Lebanon’s crypto transaction volume is up about 120%, year-over-year, and it ranks second only to Turkey in terms of the volume of cryptocurrency received among countries in the Middle East and North Africa. (Globally, it’s in 56th place in peer-to-peer trading volume.)
Access to a smartphone is critical, too. Although official statistics show that internet penetration in Lebanon is around 80%, the country’s debilitating power cuts disrupt internet service. But the country’s telecom networks operate their own power generators to keep running continuously.
“We are putting our money in our phones. That is the easiest way,” said Abu Daher.
A Lebanese woman stands next to her empty refrigerator in her apartment in the port city of Tripoli, north of Beirut, on June 17, 2020.
Ibrahim Chalhoub | AFP | Getty Images
In 2017, Marcel Younes was working as a marketing manager with Pfizer in Beirut when he tried to get rich by getting into bitcoin.
A pharmacist by training, Younes soon strayed from tracking price charts and instead became engrossed by the economic theory underpinning digital currencies like bitcoin.
As he continued his studies, he noticed a lot of similarities between Lebanon, Venezuela, and Argentina.
“I panicked and withdrew all my money from the bank,” said Younes, who added that he emptied his account in mid-2019 — just a couple months before banks locked people out of their accounts. “I was paranoid thanks to bitcoin.”
Younes tells CNBC that he initially moved 15% of his money into bitcoin, and he kept the remaining balance in cash. Today, 70% of his cash is in bitcoin.
“I was actually telling everyone to do the same in my family, like, please try to withdraw some money, and don’t keep it in the bank,” said Younes.
“But no one really believes a pharmacist — a person who is not related to our banking system,” said Younes.
Graffiti reading “VIRUS” and “THIEF” covers the facade of a fortified local branch of the Bank of Beirut in the Lebanese capital on May 18, 2020.
Patrick Baz | AFP | Getty Images
Younes, who was born in Poland but moved to Lebanon with his family in 1998, tells CNBC that most of his family works in the banking system in Lebanon.
“They always believe that everything is fine with the banking system, so you get this confidence that everything is alright,” he said.
Within months, his family was wiped out.
His father-in-law, who is 75 years old and retired years ago, had safeguarded his entire net worth in the bank.
“My family, like every single family member in Lebanon, got really hurt by the whole devaluation and currency crisis,” said Younes.
A by-product of the spiraling currency has been the erosion of earning power.
“My aunt, for example, she’s a teacher. Right now, her salary is $50 per month. My father, who’s a doctor with over 30 years of experience, his salary is around $500 a month,” explained Younes. “It happened gradually, because every few months, we have a small devaluation, and it all culminated in a 95% devaluation of the Lebanese lira.”
Younes has since founded Bitcoin du Liban (a play on the name of Lebanon’s central bank, Banque du Liban), a group with a mission to help close the knowledge gap on bitcoin in Lebanon through in-person meetings, online tutorials, and chats via the organization’s Telegram group.
A man holding a smartphone shows a screen grab taken from a video of an armed depositor gesturing at employees of a local bank in Beirut after he stormed the branch and held employees and customers as hostages. The man, who entered the bank carrying a machine gun and gasoline, demanded to be handed over part of his deposited money, which amounts to $209,000.
Marwan Naamani | Picture Alliance | Getty Images
Multiple sources tell CNBC that people across the country are afraid to put their money in the banks or store it in cash at home because of the risk of theft. Alex Gladstein, chief strategy officer for the Human Rights Foundation, says these kinds of situations are one clear value proposition for bitcoin.
In bitcoin, one of the mantras is — “not your keys, not your coins” — meaning that rightful ownership of tokens comes through the custody of the passwords that enable the crypto to be moved out of the wallet.
“If you had your money in the bank in Lebanon, it’s all gone. Who knows how much of it you will ever see again. Meanwhile, bitcoin rises and falls in the global market, but if you self-custody your bitcoin, you always have it as an asset, and you can use it as you see fit and send it anywhere in the world,” explained Gladstein. “It has superpowers compared to fiat currency.”
There are a lot of ways to store crypto coins. Online exchanges like Coinbase, Binance, and PayPal will custody tokens for users. Abu Daher, for example, keeps 100% of his cash in online crypto wallets on Binance and KuCoin, as does Al Zaatare, who says that he saves his bitcoin on Binance.
More tech-savvy users sometimes cut out the middleman and hold their crypto cash on personally owned hardware wallets. Gebrael, for example, prefers the autonomy and security that he derives from self-custody of his bitcoin. He tells CNBC that he keeps all of his bitcoin in cold storage on a thumb drive-sized device called a Trezor hardware wallet.
A person holds a cryptocurrency hardware wallet.
Geoffroy Van Der Hasselt | AFP | Getty Images
Beyond the added security of holding his own keys and disconnecting his wallet from the internet, Gebrael says the appeal of cold storage has a lot to do with the fact that he doesn’t have to connect his personal identity to his bitcoin. He added that the anonymity offered by self-custody helps protect him from being caught in the crosshairs of government-issued sanctions. Gebrael cited the example of the Canadian government blacklisting all crypto exchange wallets connected to the truckers participating in the ‘Freedom Convoy’ protests.
Gebrael says he also doesn’t like the user experience of centralized digital asset exchanges like Binance and Coinbase “with all their flashy charts.”
“It’s like one huge casino, and they want you to gamble your money,” said Gebrael.
Lebanon has six bitcoin ATMs — one in Aamchit and five in Beirut, according to metrics offered by coinatmradar.com. But those who spoke with CNBC for this story say that the optimal on-ramps to accessing bitcoin are either earning it (through mining or paid work), or buying it with tether.
A worker uses a mobile phone torchlight to illuminate his cutting space at the fish market, where portable emergency lighting runs due to a power cut, in Beirut, Lebanon, on Wednesday, Sept. 8, 2021.
Francesca Volpi | Bloomberg | Getty Images
When asked how reliable it is to safeguard wealth in an inherently volatile asset like bitcoin — which is down more than 70% in the last year — Younes says that “it’s a matter of perception.”
“If you go back to two, three years ago, it was $3,500,” said Younes, who added that he isn’t really concerned about the price of bitcoin.
When Younes first bought bitcoin, it was trading at about $20,000, so as of today, he tells CNBC that he hasn’t made any money. But investing his cash into the world’s largest cryptocurrency also has to do with the fact that he wants to bet on a new monetary system.
“Bitcoin offers a system that is uncorruptible; a system that is basically permissionless and censorship-resistant,” he said. “No one can really devalue bitcoin due to its monetary policy, which is 21 million bitcoin.”
Ultimately, money is a human belief system. For some in Lebanon, it has been a lifeline, for others, it’s a passing fad.
El Chamaa hasn’t turned to crypto, and he stands by the decision, even after spending time reporting on the ground at Abu Daher’s crypto mines.
“If you look at what bitcoin and ethereum are worth today, I mean, it’s worth a fraction of what it was a year ago. So I’m kind of glad I didn’t get into it,” said El Chamaa.
“Warren Buffett is basically saying that it doesn’t have an intrinsic value and just passing it on to the next person and helping to make a profit off of that doesn’t make any sense. So I’m a bit skeptical,” he said.