Culture

Inside Lebanon’s Currency Crisis: How Hyperinflation Feels

Published

4 hours ago

September 30, 2024

Lebanon is back in the headlines as the conflict in the Middle East intensifies. Before these latest developments, Lebanon had already become a symbol of how quickly a seemingly stable society can descend into chaos.

If you follow major events in the global economy, you’ll probably recall that Lebanon’s recent past serves as a vivid example of what a full-blown currency collapse looks like in a modern, advanced economy. While there are some great books that describe hyperinflation in detached, academic terms, what’s often missing is the human story – what it’s actually like to be a normal, productive person with a family and a bank account, and to live through the collapse of your country’s currency.

For a while now, I’ve known that my friend Tony Yazbeck, co-founder of The Bitcoin Way, had experienced this reality. But it wasn’t until I watched this interview with him that I realized how valuable his story is for everyone to hear. Tony’s story offers a rare, personal glimpse into what it means when your country’s banking system disintegrates, when you lose access to your savings, when food prices rise 10-fold in a few months, and when even basic necessities like medicine and fuel become luxuries.

I asked Tony if he could explain not only why Lebanon collapsed, but also how bitcoin could have been a lifeline in such a dire situation.

Lebanon: A country on the brink

Before its economic collapse, Lebanon was a vibrant, cosmopolitan country, often called the “Paris of the Middle East.” Its economy thrived on banking, tourism, and services, positioning it as a bridge between East and West. For Tony, this prosperity wasn’t an illusion—it was his daily life. “My life in Lebanon was extraordinary,” he recalls. “I ran three thriving businesses and lived a luxurious lifestyle. Whether it was the latest cars, the best restaurants, or the hottest clubs, Beirut had it all.”

Yet beneath the surface, cracks were forming. Lebanon’s banking sector, once a source of pride, was built on unsustainable practices, and the country was drowning in debt. For years, Lebanon’s central bank had pegged the Lebanese pound to the U.S. dollar at an artificially high rate, creating a false sense of stability.

This currency peg required constant inflows of dollars to maintain. When those inflows dried up, the house of cards collapsed.

In 2019, Lebanon’s banks began restricting access to savings, imposing informal capital controls without any legal framework. “Overnight, people lost access to their funds,” Tony says. “You couldn’t withdraw your own money, and even if you could, it was in Lebanese pounds that were rapidly losing value.”

For those unfamiliar with a currency crisis, the limitation of bank withdrawals is one of the first signs that the system is failing. The government and banks try to delay the inevitable by locking down money in the system. By then, it’s too late.

From thriving businesses to $70 in hand

In early 2020, Lebanon defaulted on its foreign debt, and the value of the Lebanese pound plummeted. Hyperinflation set in, destroying the purchasing power of ordinary people.

Tony watched helplessly as his savings evaporated and his businesses crumbled. “I went from being a successful entrepreneur to having just $70 to my name in what felt like the blink of an eye,” he recalls. “I couldn’t pay rent, school fees, or even afford basic groceries.”

Hyperinflation took hold with shocking speed. “A loaf of bread that once cost 1,500 LBP shot up to over 30,000 LBP within months,” Tony explains. Fuel prices were even worse. “In early 2023, a gallon of gas went from 25,000 LBP to over 500,000 LBP in just a few weeks. It was impossible to keep up with the prices.”

The destruction wasn’t limited to material wealth; the psychological toll was immense. Tony describes the anxiety and panic that came with watching his hard-earned success disappear. “For the first time in my life, I didn’t know what to do. I felt completely helpless.”.

A fractured civil society

As Lebanon’s currency collapsed, so did its social fabric. People who once lived comfortable, middle-class lives suddenly found themselves struggling for survival. Basic goods became scarce, and the price of everyday items skyrocketed.

Power dynamics within communities shifted as those who controlled essentials like food and fuel gained disproportionate influence. “There were reports of gangs taking over neighborhoods, controlling access to goods and demanding protection fees,” Tony recalls.

Even electricity became a luxury. With the national grid in shambles, most people had to rely on private generators, but the cost of running them was astronomical. “Monthly generator fees jumped from 200,000 LBP to over 4,000,000 LBP,” Tony explains. Many families were forced to live without power for long stretches of time.

In response to the crisis, people turned to alternative forms of exchange. Bartering became common, with people trading goods and services directly. “If you couldn’t pay in cash, you might offer plumbing work in exchange for groceries,” Tony says. The U.S. dollar, already widely used before the collapse, became the default currency for many transactions. Digital currencies, and especially stable coins like Tether (USDT), also gained traction as people sought ways to preserve value outside the collapsing banking system.

What could have been: Bitcoin as a lifeline

As Tony recounts the collapse, questions loom large: Could this have been prevented? Or at the very least, could individuals have somehow protected themselves better? For Tony, the answer is clear: Yes – with access to bitcoin, many of the worst effects of the crisis might have been avoided.

“If I had known about bitcoin before the crisis, it could have saved me,” Tony says without hesitation. “Bitcoin would have given me a way to store value outside the banking system, which completely failed. I wouldn’t have been locked out of my own savings, and I could have preserved my wealth as the Lebanese pound collapsed.”

Bitcoin is immune to the kind of capital controls Lebanon’s banks imposed in 2019. No government or bank can freeze your bitcoin or restrict access to it. In a country where the banking system became a trap, bitcoin would have provided a way out.

Even as Lebanon’s currency lost over 90% of its value, bitcoin held its purchasing power globally. “Bitcoin isn’t tied to any government or central bank, so it can’t be manipulated the way the Lebanese pound was,” Tony explains. “It’s a hedge against hyperinflation, which would have been critical when prices were doubling and tripling every few months.”

Bitcoin’s status as a digital bearer asset would have been equally important. “When cash becomes worthless and banks stop functioning, how do you pay for things? How do you trade?” Tony asks.

In Lebanon, bartering and informal exchanges became necessary for survival. In many situations, bitcoin may have served as a viable alternative to barter, worthless Lebanese pounds, and U.S. dollars that were difficult to obtain.

Lessons for the world

Lebanon’s crisis offers a stark warning to the rest of the world. While many people in developed countries believe that their economies are too stable to collapse in such a way, Tony’s experience should give us pause. “What happened to me could happen anywhere,” he warns. “Don’t think you’re immune just because you live in a so-called stable country. The mechanics of fiat currency are the same everywhere.”

Tony points to the U.S. as an example of a country that is walking the same dangerous path as Lebanon. “The U.S. national debt now exceeds $35 trillion. Since 1971, when the dollar was taken off the gold standard, the money supply has increased by over 8,000%. That kind of money printing can’t go on forever.”

While the U.S. benefits from being the issuer of the world’s reserve currency, that status isn’t guaranteed indefinitely. “All fiat currencies are headed to zero eventually,” Tony cautions. “Some will fail sooner than others, but they will all fail. The U.S. dollar might be the last to go, but its turn is coming.”

The lessons from Lebanon’s collapse are clear: Protect your wealth before a crisis hits, and don’t assume that your government or banking system will be there to save you when things go south. For Tony, that means turning to bitcoin. “Bitcoin is the only asset that’s truly un-confiscatable,” he says. “It’s the only way to escape a broken system.”

A new mission to rebuild with bitcoin

In the aftermath of Lebanon’s collapse, Tony has dedicated his life to helping others avoid the same fate. He founded The Bitcoin Way, a bitcoin education and technical services business designed to teach people how to use bitcoin to protect themselves from currency crises. “The crisis forced me to study and understand money,” Tony says. “I realized that the fiat system is a scam, designed by thieves to steal and control us. Bitcoin is the solution.”

Every day, Tony educates his clients about how to take control of their financial future using bitcoin. “Once you understand how bitcoin works, you see the flaws in traditional fiat systems,” Tony explains. “You learn how to manage your assets securely, make transactions independently of banks, and protect your wealth from inflation and economic instability.”

The road ahead

Tony believes that the collapse of the Lebanese pound was avoidable, but that would have required structural reforms that never came. “If Lebanon had tackled corruption, maintained transparency, and adjusted the currency peg responsibly, things might have turned out differently,” he says.

But given the deep-rooted corruption in Lebanon’s political and financial systems, the collapse was almost inevitable.

As Tony reflects on his experience, he sees parallels between pre-crisis Lebanon and the current state of many developed economies. “We’re seeing the same issues – rising debt, unsustainable monetary policies, and corrupt institutions,” he says.

The warning signs are there, but many people ignore them, believing that their country is somehow different.

For those who are paying attention, Tony offers practical advice. “Start educating yourself about bitcoin now, before it’s too late,” he urges. “Diversify your assets and don’t rely on fiat currency to preserve your wealth. The mechanics of hyperinflation don’t change just because you live in a wealthy country.”

Lebanon’s collapse is not just a cautionary tale for people living in developing economies. It’s a wake-up call for the entire world.

As governments continue to print money at unprecedented rates, the risk of a global currency crisis grows. Bitcoin offers a way out – an inflation-proof alternative that can protect the wealth of individuals when fiat currencies fail.

Tony’s experience is a stark reminder of the fragility of fiat systems and the importance of financial sovereignty. “With bitcoin in your custody, you have the power to protect yourself from corruption, manipulation, and inflation,” Tony says.

“You don’t need permission from a bank or a government to manage your own money. And that’s exactly what makes bitcoin the ultimate tool for financial freedom.”

This is a guest post by Dave Birnbaum. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Culture

The Three Doors: Which One Will Bitcoin Step Through?

Published

5 days ago

September 26, 2024

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Mircea Popescu is a mostly forgotten figure in this space, but he was once a very impactful cultural figure early on before he slowly faded out of the wider public sphere to eventually “accidentally” drown off the coast of Costa Rica. He was quite an insane and eccentric, but he has left a lasting impact on this space. I would argue he is essentially the Godfather of what people these days consider “toxic maximalism,” although compared to people who claim that label today he would make them seem like overly sensitive and whiny children.

One of his most prolific posts in my mind was his consideration of the price of Bitcoin and the market dynamics that entails in the long term, from 2013. He was discussing the dynamics of supply and demand interacting with each other, and specifically the mentality of current bitcoin holders in contrast with average consumers that may or may not have an incentive to attempt to accumulate bitcoin in response to the deterioration of the fiat system.

He framed the posited friction between these two groups as an impasse, where current holder have no great incentive to part with their bitcoin, and people trying to get rid of their devaluing fiat have no real recourse if holders of bitcoin act in that way.

He proposed three possible solutions to that impasse.

“One of them is that consumers yield and submit, Bitcoin goes to somewhere in the thousand dollars per range and there’s a rush to move society away from the dysfunctional standard. Banks start taking Bitcoin deposits, Bitcoin hedge funds pop up everywhere, the FED chairman, ECB chairman and everyone else come to Timisoara whenever they want to make a move to obtain my blessing and so forth.”

This is the path we are seemingly on right now. Capitulation of the existing system, integration into the legacy financial system, the veneration of early adopters and Bitcoin as a solution to the systemic problems of fiat. This is what Bitcoiners currently cheer on in terms of our path forward, citing every tiny piece of news from a banking institution, an ETF, an investment fund, as proof that they are capitulating! We have won!

This is pure and utter delusion. Trump pandering to Bitcoiners seeking campaign financing does nothing to truly benefit Bitcoin, he is and will always be a fan of the dollar. His mentality is based around the idea of the money printer, and exporting our inflation globally, being a massively positive thing for American interests. The Democrats overwhelmingly are antagonistic towards the space, for similar reasons.

Even if such a future was to truly come to pass, in actuality and not just in name, it would be a very dire and depressing future for anyone who looks to Bitcoin as a tool for freedom and sovereignty. Using Bitcoin would provide that to almost no one. Hedge funds, banks, ETFs, would all be the keyholders for the vast majority of people. No one would truly have any degree of freedom, it would be the same financial system we exist in now where nothing can be done without seeking the permission of some overlord who truly has control of your funds. Regulations would not enable more competition in this sphere, the existing players would take advantage of their revolving doors to encourage capture and high walls around their privileged position in this role.

This path would essentially mean failure of Bitcoin as a tool for freedom, and the same game we see being played right now with slightly stricter rules for the privileged few who can get a seat at the table.

“Another one of them is that consumers revolt, governments intervene, we all spend the remainder of this decade fighting with each other. Bitcoin also goes to thousands of dollars per, but the energy, effort and resources which could have been expended on comfortably yielding and productively submitting are wasted in an ultimately doomed effort to play tough on a weak hand. Neutral and unengaged governments win, and as the dust settles the balance of macroeconomic power has shifted from the Western world to whatever, China, Iran, Brazil, what have you.”

This is the path of them fighting Bitcoin overtly. People actually start switching to Bitcoin en masse, and governments react in a reflexive manner to try to prevent this. Things domino from here as Bitcoin begins to become a more important aspect of global finance outside of the purview of the legacy financial system, and countries that fight and refuse to let it happen wind up just screwing themselves over as smaller and more adaptive jurisdictions who stay out of it or embrace this change wind up benefiting enormously.

In this world Western governments make using Bitcoin an enormously difficult task, but people persevere anyway. The rest of the world with a brain stays out of the way, or proactively embraces it, while the West spends all of its effort and resources futilely fighting the inevitable. The rest of the world experiences a financial renaissance, while the Western world stagnates, its citizens forced to fight uphill the entire time to retain any degree of economic success (or even just staying afloat).

As brutal as it sounds, this is the world I want to see. One where the West’s domination and coercive control over the rest of the world erodes. We have no special right to lord over the rest of the world in the manner we do, and this path forward would strip us slowly over time of the ability to continue doing so. Citizens of the West can embrace Bitcoin, and stand up for our individual freedoms and sovereignty, and in doing so cushion ourselves from the collapse of our corrupt institutions.

A victory in revolution doesn’t come free or easy. For Bitcoin to really do what many of us hope it can, it’s really necessary at the end of the day to walk a painful path. And that means people have to choose to walk it. Many people in this space think that governments will simply roll over and let Bitcoin win, but that is just a feint to move in and capture it.

We need to push to build around them, build in parallel, and force their hand. If they don’t actively fight it, then there is something else going on. That isn’t good for us.

“Yet another one of them is that consumers revolt, entrepreneurs intervene, before the end of 2015 there’s about a thousand to a million different Bitcoin forks, each with its ten million-ish monetary base worth about a dollar, on global average. The size of the inter-Bitcoins market, the complexity and confusion ensuing makes pretty much everything unmanageable for the “ordinary person”. Hedge funds and banks (the ones a little ahead of using Excel) that trade in this murky complexity make a killing and become the principal driver of economic growth worldwide. Not only is the consumer about as screwed as is currently the case, but to everyone’s benefit he has just been clearly proven yet again that revolt = being fucked in the ass harder, longer, with a thicker implement with sharper barbs on it. Also conveniently, the thing to revolt at has become much more vague and intangible. On the balance of probabilities this would seem the most likely outcome, strictly because history unerringly flows in that direction which most cruely rapes the “average person”.”

Popescu rated this as the most likely outcome. Constant fragmentation, Bitcoin shattering into an innumerable number of forks from the original. Each region, or group of people with a different idea, breaking off into their own different networks. Erosion of the network effect until it localizes with more sub-fragments than people can keep track of.

Everyone assumes that this is over, that this door was simply a phase we passed through during and in the immediate aftermath of the blocksize wars, and it is closed forever. That is delusional. Nation states are adopting Bitcoin, major financial institutions that essentially write government policy are stepping on stage and integrating it into their systems.

The world is a game of coercion and extortion politics, the US invades countries and slaughters hundreds of thousands of people simply to keep the flow of commodities moving in the direction it wants to. To imagine they and other interests wouldn’t fork Bitcoin for their own self interest at a global scale is naive. I would even go so far as to say that opening the first door, the “capitulation” and capture of Bitcoin quickly by these people would almost guarantee that this last door eventually opens.

This is a failure of the utmost degree. Fragmentation, no singular network effect that enforces a true scarcity of supply, and more importantly rules, on economic players globally. A brief respite and then immediate return to the game we know now. Complete and utter failure of any form of revolution.

All three of these doors are still sitting there, we haven’t walked through any of them yet. It’s anyone’s guess which one we eventually do. Bitcoiners could do with a little humility, and recognition of the fact that not only have we not even come close to winning, but failure is absolutely still on the table. In multiple ways.

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Culture

“PickleBit”: Proof of Workforce, Fold, and Pickle Pop Partner on Pickleball Tournament, Offer Bitcoin Prize Pool

Published

2 weeks ago

September 18, 2024

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The Santa Monica-based non-profit Proof of Workforce Foundation has partnered with Bitcoin financial services company Fold and Pickle Pop to organize a Bitcoin-themed Pickleball tournament, offering a $5,000 prize pool for entrants and winners.

The tournament is slated to be held on October 18 in Santa Monica, California during the Peer to Pier Bitcoin Festival. Featuring both a semi-pro and amateur division, the winner of each division will receive their payouts in bitcoin. Entrants will also have the opportunity to win Bitcoin hardware wallet devices provided by CoinKite.

“This will be an incredible event, bringing together two talented and high growth communities, Bitcoiners and Pickleballers, to support creative re-use of commercial space on the 3rd street promenade”, said Proof of Workforce Founder and Santa Monica firefighter Dom Bei.

Earlier this year, Bei’s Foundation partnered with the City of Santa Monica to launch the Santa Monica Bitcoin Office, making it the first U.S. city to do so.

“The Santa Monica Bitcoin Office is already bringing communities and revenue opportunities to key areas of our economic revitalization strategy, and has done so at zero cost to the city”, said City of Santa Monica Vice Mayor Lana Negrete. “This is exciting and an example of collaborative and innovative ideas to reimagine retail on 3rd Street.”

Brian Harrington, Senior Marketing Manager at Fold, added:

“I’ve loved seeing the Bitcoin community grow in Southern California over the years and what the city of Santa Monica is doing with it is amazing.”

Participants can register for the tournament on the PickleBit tournament website, where they will also receive bitcoin rewards for signing up and playing in the tournament.

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