In my previous article titled “Bitcoin Adoption In Lebanon”, I briefly go through all the factors that could enable the mass Lebanese adoption of Bitcoin, starting with how people in a country like Lebanon perceive Bitcoin, what are the common questions that people ask and what are the problems people are solving with this cryptocurrency. In Lebanon, the idea of Bitcoin makes sense now more than ever, many have recently got into it, it is still far from going through a population wide type of adoption but the problems are there and they are being solved using Bitcoin. However, as I mentioned in the first article of this “article series” I am trying to build, which could serve as a Bitcoin Diary in Lebanon, what comes after the big surge in demand for Bitcoin is an opportunity to meet this demand and further to facilitate the process adoption and that by, and as I quote form that article, “making Bitcoin as easy as the Facebook app”.
Bitcoin Exchange in Lebanon & The Facebook App Analogy
In order for Bitcoin to be adopted by the masses, it first needs to be accessible. In its current form, the Bitcoiners, through an emerging community in Lebanon, have done a great job to facilitate buying and selling Bitcoin and make it almost as accessible as possible. The main problem in Lebanon is that the central bank (Banque du Liban) imposed regulations on trading cryptocurrency via banks. In other words, one cannot use their bank account in Lebanon to connect it to a cryptocurrency exchange like Binance, Coinbase etc. Therefore, the market is left with peer to peer transactions, in which buyers match with sellers and vice versa, mostly through social media channels and websites. This model works fine, as you can get your hands on all the Bitcoin you wish to acquire. However, the issue here is accessibility. This model of peer to peer transactions relies on cash transferred from one party to the other through two mediums. You either meet the second trading party and you hand them the cash and they transfer to you the Bitcoin, or you have to trust the second party by sending them money through OMT and other cash transferring services. Is this as easy and accessible as going on the Facebook app and commenting on your friend’s posts? My answer is no.
If you live in Lebanon, you probably are aware that anyone, including your friends, cousins, parents, co-workers and even some grandparents, has a Facebook app and a Facebook profile. Even those who live in the most remote locations of the country either have access to at least a smartphone or both a smartphone and conventional apps like Facebook, WhatsApp etc. In their perspective everything happens on these apps smoothly and with a click of a button. They do not need to know all the backend occurrences in those apps, they just know that they work, and they trust that they do.
Two problems in the currently adopted peer to peer system, which naturally emerged from the market and by the community of Bitcoiners. First, is having to be physically present at a specified location in both cases, either because you have to meet the transacting party or because you have to visit the OMT office to deposit/withdraw your fiat money. This is simply considered not accessible enough in the digital age we live in and especially when you are trying to enter the financial digital world. Therefore, this is exactly why there should be an app that allows traders to meet digitally and finalize the transaction there. The app that would emerge in the phase II adoption process should specifically serve to solve the issue of having to be physically present to access your intended Bitcoin purchase. The second problem occurs in a case where both traders do not physically meet to complete the transaction and therefore, they must trust each other that not one of the two will deviate from the terms of the trade deal. The app in question should have a specific feature where the requirement to trust is cancelled.
Phase II: Making Bitcoin Accessible
On September 17, 2020, I attended a cryptocurrency solution meetup hosted by LIMS (Lebanese Institute of Market Studies). The meetup was led by Jon Gayfield, a crypto miner and tech expert and Dr. Patrick Mardini, a professor of The University of Balamand. Mr. Gayfield presented the idea of such app to the participants and mentioned his and Dr. Mardini’s intentions to persuade a certain company that is already operating in some countries and, as mentioned in the presentation, most notably in “some south American countries” to expand their operations to Lebanon. Such app requires somewhere around two years to be built, and since the solution is urgent, having an already established app would be much more feasible than building one from scratch that has not been tested by the market. Dr. Mardini and Mr. Gayfield understandably did not give us the name of the app/company they are dealing with.
The app’s main job is to match buyers and sellers that put their own bids and payment terms on the main marketplace homepage. Therefore, the app will serve as a meet up location in the digital world. How is it different from the community Telegram and WhatsApp groups? First, this app would be strictly for trading, no parasitic chatting. Second, it connects you to the international peer to peer market, as it enables you to use your bank account to make a crypto purchase/sale. This brings us to the locals and Lebanese diaspora connection needed. Where in so many cases, the diaspora want to send money to their offspring in Lebanon using Bitcoin, for the purpose of bypassing the central bank’s confiscation. Adding to that, this app would potentially allow you to use the so called ‘lollars’ (dollar deposit stuck in the bank) and exchange them for their USD equivalent in Bitcoin, but only if a certain market participant accepts them. Moreover, As mentioned above, you do not need to trust the second transacting party in this suggested app model, as explained by Mr. Gayfield, the app would have Escrow technology built in. When a user sends funds to the sellers of Bitcoin, Escrow keeps those funds unreleased until the seller release the Bitcoins bought. If he or she fails to do so in a certain pre-determined amount of time, the user gets their funds back and they can even leave a bad review for the trader through a specific rating system.
The first problem that comes to mind is that the government could shut down this app in Lebanon, but this is easily solved by simply using a VPN. For me, there are two bigger obstacles, one less worrying than the other. The first, which is the lesser problem, in case the bank actively seeks to shut down any bank account that is used in this app. I specifically raised this as a potential issue in the meeting, and Mr. Gayfield responded that no such occurrence that he knows of happened in the south American countries where this model has been adopted. Logically speaking, banks do not go around working as investigators by tracing every single transaction you do and shutting down bank accounts left and right. The second, which is a challenge rather than a problem, is getting enough people to be on this app. This app should be the better and easier option for Bitcoin traders, as a design it should attract the market to it. So if the app in question solves all the issues that the current peer to peer model suffers from, I see no reason why market participants would not shift to it and why the app would not be sufficient to even attract those who were sceptic and hence reluctant on using the current model.
The purpose of this app is to facilitate the process of Bitcoin adoption in Lebanon and once it is here, we enter a new phase for Bitcoin, a whole new market that provides more liquidity for the users and hence solves the problem of accessibility. The masses would be less reluctant on purchasing Bitcoin, for they would be able to do so without relying on trust and with a simple push of a button (Like the Facebook app)
From here I ask all Peer to Peer exchange companies, that perform the above mentioned tasks, to expand their work to Lebanon, the need is here and the potential number of users is growing with each passing day, it is time for us, as a community, to capitalize on this opportunity and help in the spread of Bitcoin, by presenting it as the obvious, accessible solution.
Bitcoin in Lebanon Diary