A landmark in Beirut, Lebanon, the monument in Martyrs Square still bears the scars of Lebanon’s Civil War (1975-90). Source: iStock/Joel Carillet

The Lebanese economy is in deep trouble – leading citizens to embrace Bitcoin (BTC) and altcoins in an attempt to escape the banking system and protect their savings from dwindling as the Lebanese pound continues to struggle.

Lebanese banks have attempted to halt a potential run on the pound by imposing informal capital controls, forcing customers to withdraw their savings in fiat at the official exchange rate.

But the move means that Lebanese citizens’ savings are now worth 40% less than they would be on parallel markets, reports Al Jazeera, which says that the nation is instead experiencing a “Bitcoin boom.”

The fiat’s official exchange rate is now just over LBP 1,500 to the United States dollar – a far cry from parallel exchange rates of about LBP 2,500 per dollar. Also, foreign currency withdrawals are now limited to between USD 50 and just a few hundred dollars a month. Transfers abroad were recently capped at USD 50,000 a year, according to the report.

The news agency quoted Mahmoud Dgheim, a 29-year-old crypto trader who has been active in the market since 2015, as stating,

“Right now, Lebanese are interested in escaping tight restrictions on cash withdrawals and transfers. They basically want financial freedom. If you want to go around the banking system, Bitcoin is a solution.”

Last year, the government unveiled new tax plans, a move that led to a series of angry protests.

Protesters have called on Lebanon’s established political class to step aside, accuse the government of corruption and incompetence.

Watch the latest reports by Block TV.

The country’s authorities have asked the International Monetary Fund to help find a solution to manage the country’s debt.

Lebanon’s debt is currently 160% the size of its GDP, the highest ratio in the world.

CNBC reports that experts now believe that Lebanon is “virtually certain” to default on its public debut for the first time in its history.

Omar Debian, a Beirut-based cryptocurrency trader, said that Bitcoin is no longer his supplementary income, adding,

“Now, it’s definitely become the primary.”

Meanwhile, using cryptocurrencies to transfer funds out of Lebanon has become a lucrative business for many traders, who are now charging commissions of up to 5% on transfers.

A number of Lebanese citizens are favoring over-the-counter (OTC) trades: “Basically, this means we meet up in a Starbucks.” Most of these transactions happen by referral, while some buyers and sellers meet through groups on popular messaging apps like WhatsApp, where houses, cars and phones have also reportedly been put up for sale in the cryptocurrency.

“We distrust the banking system, so we just don’t use it at all anymore,” the founder of a Lebanon-based tech company with about a dozen employees told Al Jazeera.

To anyone in Lebanon — Lira (@CryptoLira)

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