Faced with an unprecedented economic crisis and a devaluation of more than 90% of the currency over the course of three years, an increasing number of Lebanese are turning to Web3 and especially cryptocurrencies to bypass banking restrictions.
To clarify, Web3 is an evolution of the Internet built on blockchains that offers users greater control and transparency over their data. It includes cryptocurrencies, NFTs, smart contracts, and DeFi.
Indeed, the essence of the crisis in Lebanon is corruption and lack of accountability, which eroded trust in the government and central banks. These circumstances highlight the necessity for trustless systems such as Web3, which is why its adoption is increasing in other developing countries.
For example, land titling in Honduras has historically been plagued by corruption and inefficiency. In response, the government partnered with blockchain company Factom to create a secure and transparent land registry system using Web3 technology, ensuring that citizens are able to access their rightful land titles.
Moreover in 2018, Sierra Leone became the first country in the world to use blockchain technology to verify election results in real-time. The system, developed by Swiss blockchain company Agora, helped to increase transparency and reduce the risk of electoral fraud, ensuring that citizens had confidence in the electoral process.
Let's also take a look at El Salvador, which has adopted Bitcoin as its national currency:
"Over the past year, almost every traditional international media outlet has claimed that because of our bet on bitcoin, El Salvador would default on its debt payment before January 2023," tweeted President Nayib Bukele. "Well, we just paid it off, 800 million dollars plus interest," he continued.
Mr. Bukele's project is complex and controversial due to the high volatility of Bitcoin, but it presents encouraging signs for long-term adoption. In fact, the limited supply of Bitcoin creates a deflationary effect, which enables it to achieve stability.
Here are some advantages that Web3 could present in Lebanon:
-Ease of exchange:
Cryptocurrencies make it possible to transfer money quickly, inexpensively, and without limitations. This is particularly beneficial for members of the diaspora who wish to support their families in Lebanon, and vice versa.
In contrast to conventional financial systems, which may pose access difficulties for low-income individuals, cryptocurrencies can be utilised by anyone possessing a smartphone and an internet connection.
Cryptocurrency transactions are generally anonymous, without fear of surveillance or censorship.
The implementation of Web3 can result in the creation of novel employment prospects. For instance, the entrepreneur Michel Haber hires Lebanese developers to work on international projects, enabling foreign companies to benefit from a skilled and cost-effective workforce.
-DeFi (Decentralised Finance):
DeFi platforms present an opportunity for the people of Lebanon to exchange cryptocurrencies and generate interest on their savings. Furthermore, crowdfunding and peer-to-peer lending systems can be established by utilising blockchain smart contracts. This enables entrepreneurs, students, and businesses who face difficulties in securing loans from conventional banks to access funding.
NFTs are digital assets that can represent not only artwork but also fractional ownership of tangible assets like businesses or real estate. This could be a game-changer for Lebanese who are facing challenges in acquiring capital to invest in shares or real estate stocks.
However, it's not unfounded to consider the possibility of money laundering when dealing with cryptocurrencies. The anonymity provided by these transactions can be exploited by malicious actors for illicit purposes, also like funding terrorism.
But with the implementation of appropriate regulations and efficient data analysis tools, it's possible to monitor cryptocurrency exchanges and identify any suspicious behaviour. In fact, the blockchain's immutable and verifiable storage of transactions ensures the data's integrity, enabling a compliance check. Thus, the use of cryptocurrency can actually aid in combating money laundering and terrorism.
In conclusion, web3 presents remedies for urgent issues in Lebanon. Nevertheless, we need to exercise caution and avoid being swept away, since the absence of adequate regulations in the region increases the risk of fraudulent activities.