Lebanon's fall and Bitcoin's solution

Satoshi created an alternative to a corrupt fiat-based banking system. Lebanon is a prime example of how bad things get in a fiat system, and a lesson for the rest of us on why we need Bitcoin in order to fix this.

Read below and prepare with $BTC.

This is the tragic story of how ''gradually, then suddenly'' played out for Lebanon.

Jan 2023 1 Bitcoin = 25M LBP

Feb 2023 1 Bitcoin = 360M LBP

and only up from then...

What will happen to the price of Bitcoin when the rest of the fiat system has their banking crisis?

To understand what happened in Lebanon - and what might happen to the rest of fiat-based currencies and countries - we look at how citizens of Lebanon have been exploited by corrupt leaders grifting at all layers the cake:

1. Government

2. Central Bank

3. Commercial Banks

1. Government

After the civil war in Lebanon in the late 1980s, foreign aid was sent to rebuild the country. As it happens tragically often, a lot of that foreign aid ends up in the wrong hands, enriching a few well positioned officials instead of the citizens of the country.

2. Central Bank 

Organisations and governments sending foreign aid noticed the problem, and stopped the bleeding.

This led officials in power to look for new ways to enrich themselves at the expense of the rest. Their answer was the central bank.

The first step was for the central bank to offer extremely high (10%+) interest rates to attract foreign currency.

The plan worked, and foreign currency started to pile up in the central bank, allowing officials to fuel government spending.

Increased government spending is not a problem per se. But when not spent on initiatives that creates growth and hence increase the taxpayer base, it becomes a problem.

This is what happened in Lebanon, with those in power enriching themselves yet again.

In essence, the country took on more and more debt at a higher and higher cost, yet the citizens in Lebanon didn't see any improvements or initiatives that improved the country.

The debt burden was in full swing, spiralling out of control.

3. Commercial Banks

As we've seen many times before in the fiat banking system, whenever contagion starts to spread, it spreads fast and often starts from unexpected places.

Lebanon's banking system is no exception.

As the war in Syria intensified and risk in the region spread, the central bank couldn't attract enough currency to service their debt.

So they turned to commercial banks, creating ever more complex high yielding products to keep up.

While history rhymes and the path is always different, the end result is the same: (hyper)inflation

Prices started to skyrocket.

Wages were kept stagnant.

Basic needs like food, medicine and electricity became increasingly difficult to get.

Citizens had to resort aggressive action to save themselves and their loved ones.

An example that went viral back in August last year was this man, fighting to get his own money back to pay for his dad's operation.

The story of Lebanon is truly tragic, and a reminder of what is to come for the rest of the fiat-based system. This is what Satoshi wanted to fix, and our job as Bitcoiners are to prepare for when (not if) it happens to the rest of us.