11 ms·

People mock the value of BTC a lot on HN, but it’s this exact kind of risk that it helps protect against (if you self custody).

oarabbus_ 4y ago
How would self-custody of BTC allowed this man to pay for his father's medical bills? As far as I'm aware the hospital did not accept bitcoin payments. There have also been several instances in time where BTC has lost 80% of its value (and many more instances of 50%+), so it doesn't protect against the downside risk of needing money in an emergency.
- rubatuga 4y ago
  They would certainly accept USD
  - skybrian 4y ago
    Yes, Lebanese people with foreign bank accounts were probably better off. But not all USD-denominated accounts are necessarily safe (it depends on the country), and sometimes it might be hard to open an account.
- gonehome 4y ago
  I’m not advocating for putting 100% of your money into BTC, but a chunk would help (especially in countries with less stable currencies). The hospital might not take it directly, but he’d still retain control of it and be able to find a way to exchange it for something the hospital does take.
  - oarabbus_ 4y ago
    I do think allocating some percentage into BTC makes sense depending on an individual's risk tolerance. But only as a speculative investment and absolutely not for emergency funds, due to the volatility.
    - gruez 4y ago
      > But only as a speculative investment and absolutely not for emergency funds, due to the volatility. In a country with a sound financial system, 6 months of expenses in a savings account might suffice. However in a country without a sound financial system you'd want 6 months of expenses in a savings account to protect against your own job loss, and maybe 6 months of expenses in bitcoin/offshore account to protect against a local financial system collapse.
    - gonehome 4y ago
      It's also a hedge against local currency failure and can be useful in an emergency situation as shown here. Hoarding USD could also work, but it may be harder to get and it's definitely harder to protect/move in large amounts.
      - oarabbus_ 4y ago
        >can be useful in an emergency situation as shown here. Clearly holding Lebanese currency in a bank may not be useful for holding emergency funds. But I do not believe that it's been shown that at point in time an asset which can drop 50% in value over two months, which is the type of acute timeline in which an emergency can occur, and requires transacting into LBP anyways in this scenario, is useful for holding emergency funds either.
  - ma2rten 4y ago
    It might help in this situation, but it's not the best possible solution. Storing it in USD or gold is more stable. You could keep those in a vault or in a foreign bank account. Bitcoin is very volatile and, as you said, still requires exchange, which might also be very tricky in a situation like this.
- canadaduane 4y ago
  It solves the initial problem of "how do I get my money out of the bank" because you ARE the bank (sort of). BTC doesn't directly solve the problem of liquidity, exchange to other currencies, etc. however.
  - Sebb767 4y ago
    > It solves the initial problem of "how do I get my money out of the bank" because you ARE the bank (sort of). Unless you use an exchange, which a lot of people do. You don't have to, of course, but you could also keep your savings in cash - which would not only avoid the above problem, but also rid you of the need to exchange it.
- primax 4y ago
  It would help because: A: his money would be on the blockchain where it's unable to be seized by the bank. B: as Bitcoin is a world currency it's unlikely would face inflation to the level that the local currency has C: if he was unable to change Bitcoin into the local currency to pay for the medical procedures, he could transact with someone like a money changer instead This scenario is kind of the whole reason the Bitcoin exists
  - oarabbus_ 4y ago
    Once he finds a local Lebanese money changer willing to exchange LBP for bitcoin (for how large of a fee?) and sends the BTC, he now finds himself in the exact same situation as the bank - having to trust a centralized entity. And inflation is also not so much a concern if the value of the asset itself drops 50% in two months.
    - junofan 4y ago
      What centralized entity? Do you mean counterparty?
      - oarabbus_ 4y ago
        No, I mean the local centralized entity that would need to have sufficient LBP available for exchange for BTC to solve this man's problem. He needs to pay a hospital, not trade crypto with an anonymous counterparty.
        myownpetard 4y ago
        That's still just a counterparty. It would be centralized if there were a third actor that mediated all transactions between two parties, e.g. a FOREX exchange or bank that processed the transaction. That's like saying TOR is centralized because you interact with a "centralized" peer.
        oarabbus_ 4y ago
- notch656a 4y ago
  Lebanon is not a country lacking people who keep savings in cash, and some of those people likely need to send it out of the country without suffering their broken banking system. Honestly I'd be surprised if it _was_ hard to trade crypto for cash in Lebanon.
- siwatanejo 4y ago
  > How would self-custody of BTC allowed this man to pay for his father's medical bills? As far as I'm aware the hospital did not accept bitcoin payments. Sell your BTC for cash, in person. > There have also been several instances in time where BTC has lost 80% of its value (and many more instances of 50%+) Better than the 90% inflation (or withdrawal "correction") in Lebanon.
  - analog31 4y ago
    Nobody can get cash to sell you.
  - ClumsyPilot 4y ago
    > Sell your BTC for cash, in person. This is totally absurd - you need to buy real goods, they are priced in USD, there is shortage of USD in the country. noone will trade with you your only chance is to pay bitcoin to someone abroad who can exvhange them for USD there and ship goods to you that you can trade locally
    - siwatanejo 4y ago
      > noone will trade with you There are P2P non custodial exchanges where you can sell your BTC in person (e.g. LocalCryptos), in case you need to stop hodling for some sudden expense, like the medical bills for your dad.
      - oarabbus_ 4y ago
        Did you try to search Lebanon on localcryptos or localbitcoins? The former has no listings which transact in LBP, only one which requires Western Union (USD). And the latter has no listings at all in Lebanon.
        siwatanejo 4y ago
        Oh well that's interesting. I myself have never had this problem in the countries I live.
- ThePowerOfDirge 4y ago
  Seems like BITCOIN has crashed to very low values recently as well: https://coinmarketcap.com/currencies/harrypotterobamasonic10inu https://coinmarketcap.com/currencies/harrypotterobamasonic10...
rubatuga 4y ago
It’s true it can help if the local currency is dogshit
skipants 4y ago
Wouldn't owning USD also protect against this?
- zarzavat 4y ago
  In this specific case, perhaps yes, but in most cases where your country is collapsing you will also want to cross borders. Your cash is likely to be confiscated.
  - ClumsyPilot 4y ago
    and if your phone and laptip is confiscates? Are you going to print a paper key, put it into waterproof capsule and eat it? Instead you could just open a bank account in a foreign bank, and they will always allow you access to your money
    - adh636 4y ago
      Or you can memorize 12 words. Not saying this should be the common practice or that everyone should do it, but having the ability to store your wealth in your mind is useful.
      - imtringued 4y ago
        This feels like a parody, you don't store wealth in your mind otherwise you could create it out of thin air you merely keep track of your personal share of the world's wealth.
    - ilammy 4y ago
      I like how people often suggest to “just” open an account in a foreign bank. Even assuming the foreign bank would not “just” refuse you for not being a resident, or being a significant risk, or not accepting your identification, or whatever. Then your Lebanese bank would surely wire the money there without any issues, and your Lebanese employer would be happy to do so as well, and of course there are no laws stating that only liras are legal payment currency for services rendered in Lebanon.
cft 4y ago
nextaccountic 4y ago
Fiat already has self custody, it's called storing banknotes under your mattress (this is sometimes done in countries with poor bank records btw). The trouble is that you need to cover yourself any risks, like losing the money to robbery or fires Which incidentally is the same problem of cryptocurrencies: you need to have good security practices to not lose money to malware or simply forgetting the password When you choose a bank you also have risks, but a different set of risks. It's more like systemic risks, that everyone else would also be affected
quickthrower2 4y ago
It does but it has other risks. Lebanon has problems with power availability so there is that. You need internet access to use it. Also it protects you but it protects a robber or hacker if they get access to your keys. It has price fluctuations that might make USD more attractive. Also you need to convert from BTC to a regular currency to buy things. Well almost everything.
NikolaNovak 4y ago
If I understand the core underlying issue (as opposed to downstream result) is a currency that lost majority of its value through volatility. Who can look me in the eye with a straight face and say bitcoin protects against volatility? That bitcoin "protects exactly" against mismanaged economy and corrupt government? It's become my mantra but I swear people on HN don't understand how crappy life can get, how oppressive governments can get, how many rights and things we take for granted can be taken away by thugs, and believe a super high tech complicated software stack can magically fix it. sorry if that sounds harsh, but you know what, it is also harsh to listen to hungry angry oppressed people and constantly claim "bitcoin can fix that for ya".
- gonehome 4y ago
  Other comments laid it out already, but you don’t understand the underlying issue. Volatility is unrelated to the risks I’m talking about. Your criticism doesn’t sound harsh, just wrong.
- stale2002 4y ago
  > Who can look me in the eye with a straight face and say bitcoin protects against volatility I can do so. As volatile as crypto is, it is still much less volatile than a national currency in a collapsing country. People in the west and in 1st world countries are much too privileged to see this though.
  - NikolaNovak 4y ago
    >>People in the US or Europe are much too privileged to see this though. I have no idea why you'd think so, thank you very much. https://en.wikipedia.org/wiki/Economy_of_the_Socialist_Federal_Republic_of_Yugoslavia#Collapse_of_the_Yugoslav_economy https://en.wikipedia.org/wiki/Economy_of_the_Socialist_Feder... https://en.wikipedia.org/wiki/Hyperinflation_in_the_Federal_Republic_of_Yugoslavia https://en.wikipedia.org/wiki/Hyperinflation_in_the_Federal_...
    - stale2002 4y ago
ProjectArcturis 4y ago
Yeah, or he could just hold physical US$ or gold.
sph 4y ago
I recommend Saifedean Ammous' interview with Lex Fridman. He's got strong opinions and a somewhat dour persona, but as Lebanese-Palestinese he's lived in a very different environment than what we're used to here in the West. If you keep an open mind and understand where he's coming from, I think he's good some insightful ideas on Bitcoin and its role in economic upheaval. https://youtu.be/gp4U5aH_T6A https://youtu.be/gp4U5aH_T6A FWIW this episode turned me from a "fuck any form of crypto" stance to an appreciation of BTC the technology. All the other scam coins and Ponzi schemes can't collapse to zero soon enough.
- janandonly 4y ago
  It is with comments like these that i feel that one upvote just isn't enough. Why can i not one time per week give a comment a +5 ? Anyways, to add some information to this: https://bitcoinmagazine.com/culture/bitcoin-should-be-the-saving-choice-of-lebanon https://bitcoinmagazine.com/culture/bitcoin-should-be-the-sa...
jeroenhd 4y ago
BTC has the same problem with exchanges gambling with their customers' currencies, setting up prices that work for them, running out of Bitcoin to trade and collapse when people want to take their money out. The Lebanese lira might as well have been a cryptocoin and the Lebanese banks might as well have been exchanges. Anyone keeping their savings in their own home wouldn't need to rob banks to get their deposit out, just like anyone who keeps their Bitcoin in their own wallet doesn't run the risk of exchanges collapsing around them.

oarabbus_ 4y ago

How would self-custody of BTC allowed this man to pay for his father's medical bills? As far as I'm aware the hospital did not accept bitcoin payments. There have also been several instances in time where BTC has lost 80% of its value (and many more instances of 50%+), so it doesn't protect against the downside risk of needing money in an emergency.

rubatuga 4y ago
They would certainly accept USD
- skybrian 4y ago
  Yes, Lebanese people with foreign bank accounts were probably better off. But not all USD-denominated accounts are necessarily safe (it depends on the country), and sometimes it might be hard to open an account.
gonehome 4y ago
I’m not advocating for putting 100% of your money into BTC, but a chunk would help (especially in countries with less stable currencies). The hospital might not take it directly, but he’d still retain control of it and be able to find a way to exchange it for something the hospital does take.
- oarabbus_ 4y ago
  I do think allocating some percentage into BTC makes sense depending on an individual's risk tolerance. But only as a speculative investment and absolutely not for emergency funds, due to the volatility.
  - gruez 4y ago
    > But only as a speculative investment and absolutely not for emergency funds, due to the volatility. In a country with a sound financial system, 6 months of expenses in a savings account might suffice. However in a country without a sound financial system you'd want 6 months of expenses in a savings account to protect against your own job loss, and maybe 6 months of expenses in bitcoin/offshore account to protect against a local financial system collapse.
  - gonehome 4y ago
    It's also a hedge against local currency failure and can be useful in an emergency situation as shown here. Hoarding USD could also work, but it may be harder to get and it's definitely harder to protect/move in large amounts.
    - oarabbus_ 4y ago
      >can be useful in an emergency situation as shown here. Clearly holding Lebanese currency in a bank may not be useful for holding emergency funds. But I do not believe that it's been shown that at point in time an asset which can drop 50% in value over two months, which is the type of acute timeline in which an emergency can occur, and requires transacting into LBP anyways in this scenario, is useful for holding emergency funds either.
- ma2rten 4y ago
  It might help in this situation, but it's not the best possible solution. Storing it in USD or gold is more stable. You could keep those in a vault or in a foreign bank account. Bitcoin is very volatile and, as you said, still requires exchange, which might also be very tricky in a situation like this.
canadaduane 4y ago
It solves the initial problem of "how do I get my money out of the bank" because you ARE the bank (sort of). BTC doesn't directly solve the problem of liquidity, exchange to other currencies, etc. however.
- Sebb767 4y ago
  > It solves the initial problem of "how do I get my money out of the bank" because you ARE the bank (sort of). Unless you use an exchange, which a lot of people do. You don't have to, of course, but you could also keep your savings in cash - which would not only avoid the above problem, but also rid you of the need to exchange it.
primax 4y ago
It would help because: A: his money would be on the blockchain where it's unable to be seized by the bank. B: as Bitcoin is a world currency it's unlikely would face inflation to the level that the local currency has C: if he was unable to change Bitcoin into the local currency to pay for the medical procedures, he could transact with someone like a money changer instead This scenario is kind of the whole reason the Bitcoin exists
- oarabbus_ 4y ago
  Once he finds a local Lebanese money changer willing to exchange LBP for bitcoin (for how large of a fee?) and sends the BTC, he now finds himself in the exact same situation as the bank - having to trust a centralized entity. And inflation is also not so much a concern if the value of the asset itself drops 50% in two months.
  - junofan 4y ago
    What centralized entity? Do you mean counterparty?
    - oarabbus_ 4y ago
      No, I mean the local centralized entity that would need to have sufficient LBP available for exchange for BTC to solve this man's problem. He needs to pay a hospital, not trade crypto with an anonymous counterparty.
      - myownpetard 4y ago
        That's still just a counterparty. It would be centralized if there were a third actor that mediated all transactions between two parties, e.g. a FOREX exchange or bank that processed the transaction. That's like saying TOR is centralized because you interact with a "centralized" peer.
        oarabbus_ 4y ago
notch656a 4y ago
Lebanon is not a country lacking people who keep savings in cash, and some of those people likely need to send it out of the country without suffering their broken banking system. Honestly I'd be surprised if it _was_ hard to trade crypto for cash in Lebanon.
siwatanejo 4y ago
> How would self-custody of BTC allowed this man to pay for his father's medical bills? As far as I'm aware the hospital did not accept bitcoin payments. Sell your BTC for cash, in person. > There have also been several instances in time where BTC has lost 80% of its value (and many more instances of 50%+) Better than the 90% inflation (or withdrawal "correction") in Lebanon.
- analog31 4y ago
  Nobody can get cash to sell you.
- ClumsyPilot 4y ago
  > Sell your BTC for cash, in person. This is totally absurd - you need to buy real goods, they are priced in USD, there is shortage of USD in the country. noone will trade with you your only chance is to pay bitcoin to someone abroad who can exvhange them for USD there and ship goods to you that you can trade locally
  - siwatanejo 4y ago
    > noone will trade with you There are P2P non custodial exchanges where you can sell your BTC in person (e.g. LocalCryptos), in case you need to stop hodling for some sudden expense, like the medical bills for your dad.
    - oarabbus_ 4y ago
      Did you try to search Lebanon on localcryptos or localbitcoins? The former has no listings which transact in LBP, only one which requires Western Union (USD). And the latter has no listings at all in Lebanon.
      - siwatanejo 4y ago
        Oh well that's interesting. I myself have never had this problem in the countries I live.
ThePowerOfDirge 4y ago
Seems like BITCOIN has crashed to very low values recently as well: https://coinmarketcap.com/currencies/harrypotterobamasonic10inu https://coinmarketcap.com/currencies/harrypotterobamasonic10...

rubatuga 4y ago

It’s true it can help if the local currency is dogshit

skipants 4y ago

Wouldn't owning USD also protect against this?

zarzavat 4y ago
In this specific case, perhaps yes, but in most cases where your country is collapsing you will also want to cross borders. Your cash is likely to be confiscated.
- ClumsyPilot 4y ago
  and if your phone and laptip is confiscates? Are you going to print a paper key, put it into waterproof capsule and eat it? Instead you could just open a bank account in a foreign bank, and they will always allow you access to your money
  - adh636 4y ago
    Or you can memorize 12 words. Not saying this should be the common practice or that everyone should do it, but having the ability to store your wealth in your mind is useful.
    - imtringued 4y ago
      This feels like a parody, you don't store wealth in your mind otherwise you could create it out of thin air you merely keep track of your personal share of the world's wealth.
  - ilammy 4y ago
    I like how people often suggest to “just” open an account in a foreign bank. Even assuming the foreign bank would not “just” refuse you for not being a resident, or being a significant risk, or not accepting your identification, or whatever. Then your Lebanese bank would surely wire the money there without any issues, and your Lebanese employer would be happy to do so as well, and of course there are no laws stating that only liras are legal payment currency for services rendered in Lebanon.

cft 4y ago

nextaccountic 4y ago

Fiat already has self custody, it's called storing banknotes under your mattress (this is sometimes done in countries with poor bank records btw). The trouble is that you need to cover yourself any risks, like losing the money to robbery or fires Which incidentally is the same problem of cryptocurrencies: you need to have good security practices to not lose money to malware or simply forgetting the password When you choose a bank you also have risks, but a different set of risks. It's more like systemic risks, that everyone else would also be affected

quickthrower2 4y ago

It does but it has other risks. Lebanon has problems with power availability so there is that. You need internet access to use it. Also it protects you but it protects a robber or hacker if they get access to your keys. It has price fluctuations that might make USD more attractive. Also you need to convert from BTC to a regular currency to buy things. Well almost everything.

NikolaNovak 4y ago

If I understand the core underlying issue (as opposed to downstream result) is a currency that lost majority of its value through volatility. Who can look me in the eye with a straight face and say bitcoin protects against volatility? That bitcoin "protects exactly" against mismanaged economy and corrupt government? It's become my mantra but I swear people on HN don't understand how crappy life can get, how oppressive governments can get, how many rights and things we take for granted can be taken away by thugs, and believe a super high tech complicated software stack can magically fix it. sorry if that sounds harsh, but you know what, it is also harsh to listen to hungry angry oppressed people and constantly claim "bitcoin can fix that for ya".

gonehome 4y ago
Other comments laid it out already, but you don’t understand the underlying issue. Volatility is unrelated to the risks I’m talking about. Your criticism doesn’t sound harsh, just wrong.
stale2002 4y ago
> Who can look me in the eye with a straight face and say bitcoin protects against volatility I can do so. As volatile as crypto is, it is still much less volatile than a national currency in a collapsing country. People in the west and in 1st world countries are much too privileged to see this though.
- NikolaNovak 4y ago
  >>People in the US or Europe are much too privileged to see this though. I have no idea why you'd think so, thank you very much. https://en.wikipedia.org/wiki/Economy_of_the_Socialist_Federal_Republic_of_Yugoslavia#Collapse_of_the_Yugoslav_economy https://en.wikipedia.org/wiki/Economy_of_the_Socialist_Feder... https://en.wikipedia.org/wiki/Hyperinflation_in_the_Federal_Republic_of_Yugoslavia https://en.wikipedia.org/wiki/Hyperinflation_in_the_Federal_...
  - stale2002 4y ago

ProjectArcturis 4y ago

Yeah, or he could just hold physical US$ or gold.

sph 4y ago

I recommend Saifedean Ammous' interview with Lex Fridman. He's got strong opinions and a somewhat dour persona, but as Lebanese-Palestinese he's lived in a very different environment than what we're used to here in the West. If you keep an open mind and understand where he's coming from, I think he's good some insightful ideas on Bitcoin and its role in economic upheaval. https://youtu.be/gp4U5aH_T6A https://youtu.be/gp4U5aH_T6A FWIW this episode turned me from a "fuck any form of crypto" stance to an appreciation of BTC the technology. All the other scam coins and Ponzi schemes can't collapse to zero soon enough.

janandonly 4y ago
It is with comments like these that i feel that one upvote just isn't enough. Why can i not one time per week give a comment a +5 ? Anyways, to add some information to this: https://bitcoinmagazine.com/culture/bitcoin-should-be-the-saving-choice-of-lebanon https://bitcoinmagazine.com/culture/bitcoin-should-be-the-sa...

jeroenhd 4y ago

BTC has the same problem with exchanges gambling with their customers' currencies, setting up prices that work for them, running out of Bitcoin to trade and collapse when people want to take their money out. The Lebanese lira might as well have been a cryptocoin and the Lebanese banks might as well have been exchanges. Anyone keeping their savings in their own home wouldn't need to rob banks to get their deposit out, just like anyone who keeps their Bitcoin in their own wallet doesn't run the risk of exchanges collapsing around them.