Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Lebanon’s underground cryptocurrency market

restofworld.org

Post reply on HN
Print view View original

61–70 of 90 posts

Re: Lebanon’s underground cryptocurrency market

#61

Post by mathgenius »

csomar wrote: post #34
mathgenius wrote: post #2

I guess that a similar story could have happened to Greece. Nice to hear that crypto is helping people in such dire need of economic stability, although it was not clear from the article what happens to the lebanese cash that was used to purchase USDT. Someone must be left holding the bag, there must be some FX liquidity that they tap into?

> Someone must be left holding the bag, there must be some FX liquidity that they tap into? You must have missed that 1. Lebanon is very corrupt and 2. there is an official exchange rate. Someone is making a killing selling on the black market and buying with the official rate.

Yes, this is the interesting part of the story. I was just wondering how it works exactly. Is there a black market lebanese pound / USD? There is no mention of this in the article. Or do they use some kind of offical lebanese pound / USD exchange? If so how does that work, can you just show up at some office somewhere with local currency and get USD?

Re: Lebanon’s underground cryptocurrency market

#62

Post by logicalmonster »

Geee wrote: post #35
imtringued wrote: post #13

Let's say you build the perfect monetary policy into a cryptocurrency. Okay, now the basic institution of money is working again but what about everything else? >Over the last two years, Lebanon has been gripped by an economic death spiral, the culmination of years of government corruption and mismanagement. The electricity supply has collapsed, pharmacies and gas stations are empty, The article mentions infrastructu…

The idea, in Bitcoin standard, is that government projects should be financed with taxes; not by printing money. When money has no cost, it inevitably results in loss of responsibility and capital mismanagement. The usual story is that government uses the money printer to enrich themselves, and also funds an army to keep people from overthrowing them. When government is funded with taxes, there are limits on how much…

> The idea, in Bitcoin standard, is that government projects should be financed with taxes; not by printing money.

I do think many Bitcoin enthusiasts might philosophically agree with the general viewpoint that paying for Government projects with taxes is a better alternative than debasing the currency, but I'd think Bitcoin itself is totally agnostic as to what Government needs to exist or how Government should be financed.

Re: Lebanon’s underground cryptocurrency market

#63

Post by lifty »

aazaa wrote: post #52

> That’s when Lebanon’s cryptocurrency market took off, along with the OTC system run by traders like Awad. The OTC ecosystem here largely operates using Tether, a cryptocurrency pegged to the U.S. dollar and therefore subject to fewer price fluctuations. The process works like this: A client who wants to buy cryptocurrency will usually open a wallet on an exchange (the most popular in Lebanon being Binance) and then…

It look like cryptocurrency is used as a remittance rails, so the actual people in Lebanon receive dollars. It's a great use case.

Re: Lebanon’s underground cryptocurrency market

#64

Post by warkdarrior »

celticninja wrote: post #55
csomar wrote: post #39

Earlier quoted context omitted.

Most of these countries finances are based on direct unavoidable taxes as they are already struggle to collect taxes the western way due to low compliance.

What's the western way? Don't you mean the US way? In western Europe most places tax at source, which means your wages are taxed before they are sent to your bank. This sort of direct taxation ensures more compliance. I think rather the issue is that many places will deal in cash, where it is easier to avoid tax.

US v. western Europe is distinction without a difference. Tax evasion is typically spread throughout the whole money lifecycle, from wage payments (where cash is used), to black-market purchases, to business deals (also in cash), to black-market imports and exports, etc.

Re: Lebanon’s underground cryptocurrency market

#65

Post by scrose »

singularity2001 wrote: post #53
disruptalot wrote: post #24

Earlier quoted context omitted.

You don't need to buy goods and services directly but it is a good way to store and invest your wealth. Most capital controls are mute once you've exited into crypto. On what basis do they hit you? Anyone that ever has any link to crypto? That's everyone. Crypto has a level of security and plausible deniability, that makes such things unrealistic. That's why you don't hear about it happening often. To many people und…

>>> it is a good way to store and invest your wealth until it goes to literally zero, which IMHO seems more likely every month

It’s likely that the alternatives also run a similar risk with less upside.

Re: Lebanon’s underground cryptocurrency market

#66

Post by johnyzee »

jon-wood wrote: post #48
nkuttler wrote: post #31

Earlier quoted context omitted.

> First, how do you use cryptocurrencies with limited access to electricity? You only need to charge your phone once per day. If power goes out, no problem. If you have no electricity at home somebody close by probably has a phone charging business.

What's powering the cell towers?

Valid question, but anecdotally, travelling often in the third world, 4G is always available, even when the whole neighborhood goes dark. Most homes use 4G routers (with a battery, basically a headless phone with a hotspot) for internet, for this reason.

Re: Lebanon’s underground cryptocurrency market

#67

Post by rubzah »

csomar wrote: post #42
908B64B197 wrote: post #15

Lebanon has a pretty large diaspora outside of the country (and with income in real currencies). And the current government is pretty corrupt. I wonder if the best strategy here isn't for the diaspora to just buy back the country for pennies on the dollar during the current collapse.

Lebanese issue is that it is being held hostage by a militia (Huzb Allah). No amount of money is going to help until these militias are disbanded and a national independent military is put into place. Besides having a giant diaspora, this diaspora still has strong ties to the motherland and many of them are also very rich. Lebanon could then come back quickly and reach western levels of development and wealth.

Do you have experience in Lebanon? The only areas that are well managed (relatively speaking) are the ones run by Hezbollah.

Re: Lebanon’s underground cryptocurrency market

#68

Post by 71a54xd »

imtringued wrote: post #13

Let's say you build the perfect monetary policy into a cryptocurrency. Okay, now the basic institution of money is working again but what about everything else? >Over the last two years, Lebanon has been gripped by an economic death spiral, the culmination of years of government corruption and mismanagement. The electricity supply has collapsed, pharmacies and gas stations are empty, The article mentions infrastructu…

This is precisely an attribute of the story-line from the game Escape from Tarkov that I didn't understand. It's set in a modern post world-war russia and most of the transactions are completed in the game's "crypto ruble". You can mine currency with GPU's etc outside of the FPS portion of the game. However, without well maintained networks and electrical grids how on earth would a PoW or PoS crypto exist at all?

Re: Lebanon’s underground cryptocurrency market

#69

Post by danield9tqh »

graeme wrote: post #51
nl wrote: post #28

Earlier quoted context omitted.

> it was not clear from the article what happens to the lebanese cash that was used to purchase USDT They are purchasing using hard cash (ie USD) outside Lebanon and then transferred there. The article is a bit confusing but this is the key bit: An agent in Nigeria will collate these sums, buy USDT, and send it to one of the top-level suppliers in Lebanon. Once they have sold it on, they will disburse cash to the ori…

Is crypto involved in any way, or is it just USDT, a centralized USD token, on centralized exchanges? I guess the agent probably has to buy bitcoin and exit if on some dollar offramp to get actual USD to give the family.

USDT is hosted on Ethereum. The value of the USDT coin does not come from cryptocurrency as you've correctly pointed out, it comes from centralized authority backing USDT. But what part does come from cryptocurrency is the decentralized tracking of account balances. If it were't for the Ethereum blockchain, the only alternative would be to get physical USD into the country or for a Lebanese individual to open up a bank account denominated in USD (which is most likely illegal and impossible). So crypto is actually part of the solution here. Hope that makes sense

Re: Lebanon’s underground cryptocurrency market

#70

Post by el-salvador »

johnyzee wrote: post #66
jon-wood wrote: post #48

Earlier quoted context omitted.

What's powering the cell towers?

Valid question, but anecdotally, travelling often in the third world, 4G is always available, even when the whole neighborhood goes dark. Most homes use 4G routers (with a battery, basically a headless phone with a hotspot) for internet, for this reason.

Does the phone / mobile network go offline during electricity blackouts in the first world?

Where I live the traditional non-voip landlines, and the mobile network have almost always worked when there is no electricity.

Post reply on HN