Faced with an unprecedented economic crisis and a devaluation of more than 90% of the currency in the space of three years, a growing number of Lebanese are using Web3 and especially cryptocurrencies to circumvent banking restrictions.
To clarify, web3 is an evolution of the Internet that allows greater autonomy and transparency for users over their data, thanks to decentralized technologies such as blockchain. It includes, for example, crypto-currencies, DeFI (Decentralized Finance), NFTs and smart contracts.
Indeed, the essence of the crisis in Lebanon is corruption, which has led to a lack of trust in the government and central banks. Especially since the main actors are not held responsible for their actions and consequently for the financial catastrophe in which they engulfed the country!
Such a context makes it possible to further appreciate the usefulness of the web3, which lies in the fact that it does not require this confidence which is lacking.
It is for this same reason that this technology is increasingly used in other developing countries such as El Salvador and Senegal.
Let’s take a look at El Salvador which has adopted Bitcoin as its national currency:
“Over the past year, almost every mainstream international media has claimed that due to our bitcoin bet, El Salvador will default on debt payments by January 2023,” President Nayib Bukele tweeted. . “Well, we just paid in full, $800 million plus interest,” he continued.
Mr. Bukele’s project is complex and controversial due to Bitcoin’s high volatility, but it shows encouraging signs for long-term adoption. Indeed, the limited quantity of Bitcoin gives it a deflationary tendency and an ability to stabilize.
Below are some advantages that Web3 could actually bring to Lebanon:
- Ease of exchange: Cryptocurrencies allow unlimited, fast and cheaper exchange of funds than traditional transfers via banks for members of the diaspora who wish to support their families in Lebanon , and vice versa.
- Accessibility: Unlike traditional financial systems which sometimes present difficulties of access for low-income people, crypto-currencies can be used by anyone with a smartphone and a internet connection.
- Anonymity: Crypto transactions are generally anonymous, without fear of surveillance or censorship.
- Jobs: the adoption of Web3 would create new job opportunities. For example, entrepreneur Michel Haber employs Lebanese developers to work on international projects. This allows the foreign companies concerned to benefit from a qualified workforce with competitive wages.
- DeFi (Decentralized Finance): Lebanese could use DeFi platforms to trade cryptocurrency and earn interest on their savings. Additionally, blockchain smart contracts could be used to create peer-to-peer crowdfunding and lending mechanisms that would provide access to funding for entrepreneurs, students, and businesses that find it difficult to obtain loans from traditional banks.
- NFTs: NFTs are unique digital assets that may not only represent art, but fractional ownerships of physical assets, such as in real estate or businesses. This would help Lebanese who are currently struggling to access capital to invest in businesses or buy real estate.
However, if the risk of money laundering crosses your mind, you are not wrong! Malicious people could exploit the anonymity offered by cryptocurrency transactions to carry out illegal activities.
But adequate regulations along with effective associated data analysis tools would be able to monitor cryptocurrency transactions for suspicious patterns. This verification of legal compliance would be possible thanks to the immutable and verifiable storage of transactions in the blockchain guaranteeing the integrity of the data. Therefore, the use of cryptocurrency would, on the contrary, contribute to the fight against money laundering.
In conclusion, web3 offers solutions to pressing problems in Lebanon. Nevertheless, we must remain vigilant and not get carried away, as the risk of scams is currently considerable due to the lack of effective local regulations.
Sara Kawas
