Bitcoin: Reflections on the Lebanese Financial Crisis

Why do the Lebanese people suddenly care about Bitcoin?

I just flew in from San Diego to Lebanon for the holidays and a shocking number of my conversations with friends and family have been about Bitcoin.

What is Bitcoin?

Most Lebanese people now feel instinctively that maybe they don’t need banks and that maybe Bitcoin can help them free themselves from the banking system. But Bitcoin is complex and fundamentally different from any technology most people have worked with before.

No inflation, No interest rates

There will never be more than 21M Bitcoins in existence and no-one has the power to change that. Bitcoin removes the ability to print money. Printing money is a more politically palatable form of taxation and there is very little sound evidence as to why it’s actually necessary.

Easy money transfer

You can transact with anyone across the world without going through a bureaucratic 3rd party.

Is it too new?

Bitcoin is new but so was the internet before it took over our lives and let anyone regardless of geography and socioeconomic status, learn anything. As amazing as the internet is, it still took 30 years to be what it is today.

Aren’t Bitcoin transactions anonymous? How will we punish criminals?

Bitcoin is actually the opposite of anonymous, every single transaction between any 2 parties is recorded forever on thousands of servers all over the world. Anyone can audit these transactions without any sort of special approval.

How can you use Bitcoin to save money if it’s volatile?

A lot of people remember Bitcoin’s famous crash from $20K, at the time there was a cryptocurrency mania very similar to the dot com bubble but the dot com bubble didn’t destroy technology, it only destroyed the fake technology companies. Similarly, the crypto was bubble may have been necessary for us to realize how good of a technology Bitcoin is.

How will I get used to it?

When I talk about Bitcoin to my friends, they often mistake my enthusiasm for advice along the lines of: “convert all your savings and assets to Bitcoin”. I have not done this myself and would not recommend it to my friends. However, having 0 bitcoins is a more ridiculous position than converting all your money to Bitcoin.

Isn’t Bitcoin used by criminals?

This is actually a hilariously bad critique of Bitcoin. When the internet was starting to be made available to general public, politicians and academics realized that they couldn’t broadcast their propaganda in a one way fashion to control what people thought so instead they argued that the internet should be banned because it contains some pages with porn and drug related content.

Who controls Bitcoin?

Everyone and no-one. Bitcoin is a network that validates transactions between people, it makes all transactions transparent and it distributes the effort of validating transactions over the participants of a network.

Stores don’t accept Bitcoin

Stores don’t accept real estate as payment for the most part either, that doesn’t mean real estate is not a useful asset.

How do I buy Bitcoin?

This is actually the hardest part right now in Lebanon. Most Bitcoin exchanges require a bank deposit so you can buy your first coins. Unfortunately, the Lebanese banking system can’t help you much there but there are projects like Project Diaspora that are trying to make this process easier.

How could Bitcoin fail?

By centralizing coins in a few conglomerates, a malicious group that controls over 51% of the Bitcoin network could start forcing incorrect changes to the Bitcoin ledger. However, as soon as this collusion is detected by others on the network (it’s easy to detect) then you can expect massive sell offs of Bitcoin which would crash the price of Bitcoin to 0. The people that would have the most to lose would be the people that own the biggest chunk of the networks, so by compromising the network the attackers would destroy the most valuable asset they’ve ever accumulated in their lives.

Parting note

Stop listening to people in fancy suits telling you what you need to do with your money. We don’t need more investment in crypto or blockchain and we don’t need banks, we just need people to start learning about Bitcoin and start owning small amounts of it.

Acknowledgements

I wouldn’t understand Bitcoin if wasn’t for Saifedean Ammous. Read his book and watch all his talks.

Robots will save us