The Lebanese economy is facing difficult times lately and their currency, the Lebanese Pound, is plummeting. Lately, it seems that the Lebanese national currency has dropped so much that its price is now valued at 1 satoshi (฿ 0.00000001).
Since December 1997 the rate of the pound has been fixed at 1515.02 pounds per US$ (February 14th, 2020). Since August 2019, the pressure on the peg has started, creating a parallel rate in the market. - Wikipedia
Throughout history, we have witnessed many currencies that were pegged to the USD collapse and massively devalued. Due to many reasons which can vary from financial mismanagement, economic war, or embargoes the answer of Central Banks is always printing more, increasing inflation, and creating terms of hyperinflation.
Actual annual inflation rate for the Lebanon is right now above 50%. Perhaps this is a conservative number as the reports I'm reading are conflicting and the realitity is that products as groceries are rising dramatically.
The problem of Lebanon entering hyperinflation is the result of the excess printing by the Lebanese National Bank. Bellow chart explains the money "M0" in circulation in the country. M0 refers to all the physical money (coins, banknotes, federal notes) in circulation. This chart provides a clear view on the reason the Lebanese Pound implodes.
Why would a Central Bank quadruple the currency in circulation in just a few months?
It seems that the Lebanese government was facing bankruptcy, probably because of a huge Debt/GDP ratio reaching 161.82%. The Lebanese government decided with the excess printing of their national currency to avoid bankruptcy although the results are equally catastrophic. Coming from a country that has seen a similar situation I am sad to say that Lebanon is economically done for. It will take many years to just begin the recovery phase and this can only be accomplished with stable growth and care for the population.
This is difficult for the population of Lebanon and in similar situations, we have observed people buying Bitcoin to store the value of their wealth. In similar economic meltdowns that happened in Venezuela, Argentina, and Zimbabwe, individual interest in Bitcoin and crypto is on the rise as the value of their national currency plummeted to nothing.
Coming Soon Everywhere
I am disturbed by the Lebanese news and there will be a further escalation. The above image is a 100 Trillion Zimbabwe dollar note. This is the main problem of national fiat currencies. The centralization of the means of payments on the hands of a government means a certain 95% devaluation in 25 years and a useless banknote that if you don't spend immediately it won't worth anything the next day. I remember talking to a friend from Venezuela and he explained that a Bitcoin dip of 10-25% even a 50% as the one that happened a few months ago, does not mean anything as holding the Venezuela Bolivar would guarantee 99% devaluation of his wealth in a few days. Bitcoin will recover from the dip eventually anyway.
Bitcoin and other cryptocurrencies besides being a method of transactions are also a store of value. Bitcoin essential is perhaps the best alternative in cases of economic uncertainty. The scarcity and low selling pressure, along with the robust security of the network are features not easily found on an asset. The surrounding centralized and decentralized services offered by exchanges, DeFi, and other blockchain initiatives have matured and while there are dangers with enough research these are minimized.
Bonus Chart - The US Dollar
Reposting from Uptrennd