Lebanon's financial crisis is only deepening with each passing day, as the country is engulfed in hyperinflation.
An unofficial report suggested that the value of the national fiat Lira has fallen by 50% in a matter of two weeks. The devaluation of Lira has made it equivalent to 2 satoshis at present, highlighting the growing problem with the world's financial policies.
Saifedean Ammous, the author of The Bitcoin Standard, took to twitter to point towards what flawed and centralized monetary policies can do. He highlighted that just ten years ago, one Lira was valued at 0.67 bitcoins while today it is mere two satoshis.
Having lost half its value in the last 10 days, the Lebanese Lira is now worth one satoshi.
— Saifedean Ammous (@saifedean) July 1, 2020
While the Lira versus the US Dollar has trended at $0.00066 since 1997, the past 2 years, with several economic mismanagements, saw its value fall by 56%. The life of ordinary citizens has become quite troublesome as their income remains the same while the cost of goods has doubled.
Hyperinflation: The Worst Effect of a Flawed Centralized Monetary Policy
Lebanon is currently undergoing economic hyperinflation, where the national fiat continuously loses its value, and people's confidence in the central bank and the government is at an all-time low.
Just before the coronavirus pandemic hit the world in late February, Lebanon saw a string of violent protests and demonstrations against the central bank. It was also reported that citizens have burned down the central bank complex.
Hyperinflation is probably the last and worst stage of an economic system failure, which in turn leads to instability and, in many cases, civil riots as people go on a looting rampage once they can't afford their basic amenities.
However, Lebanon is not just the only country struggling with this problem; Venezuela is a shining example of what corruption and flawed monetary policy can do. A state counted among the richest a decade ago has seen the value of its currency become negligible and not even worth the paper it is printed on. Similarly, countries like Iran, Zimbabwe, and even a few North American countries are facing the same problem.
Cryptocurrencies To the Rescue
It's a common occurrence that countries the worst affected by hyperinflation or similar economic crisis turn to cryptocurrencies. People in these countries may not directly use bitcoin or crypto to make direct purchases. Instead, they use it as a bridge currency to keep the value of money intact.
A recent twitter survey of Lebanon's youth suggested that 57% of the locals would prefer to be paid in bitcoin. Mahmoud Dgheim, a Lebanon citizen, said that people in his country are currently looking for a way to escape tight cash withdrawal restrictions and transfers and looking for a tool to give them financial freedom. Bitcoin is probably the answer to their problems.
Not just Lebanon, the Venezuelan government has started to accept bitcoin for its services after a failed attempt at national digital currency in the form of Petro.