Beware of Greeks bearing fiat

Monday 22 June 2015

Greece is in trouble. The prospect of default means some Greeks are turning their mind to circumventing capital controls - the perfect use-case for bitcoin.

It’s no secret that Greece is in a mess. For the last few months negotiations about their unmanageable debt have dragged on, but now they have - finally - reached a head. There isn’t much road left for the country, and unless the government swallows its pride and accepts some punitive conditions from the European Commission, ECB and IMF then it won’t get the latest tranche of bailout money. It needs the money from the IMF to pay back an instalment on a loan from the IMF (yes, it is that crazy), and without it, the country will default.

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Europe’s politicians have shown an immeasurable capacity for kicking the can down the road, but the markets are unconvinced that an acceptable solution will be met. Greek bond prices have spiked, and capital is flying out of Greece’s banks - 4 billion Euros in the last week alone. If there is a default, Greece’s government will have to impose capital controls or there will be a catastrophic run on the banks.

Trojan horse

There are easier ways of getting money out of the country

So it’s not surprising that some forward-thinking Greeks are planning what to do if that happens. For anyone in the crypto space, the answer to the problem is obvious. Put some money into a currency that doesn’t just ignore borders - it doesn’t even know they exist.

When I contacted Thanos Marinos, owner of BTCGreece, the country’s first and largest bitcoin exchange, he revealed a telling picture. ‘Last four weeks we have seen an increase of more than 200% on new clients and the average deposit per customer is up by 400%,’ he said. That can hardly be a coincidence. Merchant use in Greece is very limited, so this is obviously down to individuals. ‘Since Greek businesses are very slow on adopting bitcoin we can only assume that the main reason for new buyers is trading and saving-investing.’

The bump in Greek interest doesn’t explain bitcoin’s recent price rise from $220 to $250 - that’s down to a wave of Chinese money coming back in as a result of their government threatening to crack down on leveraged trading to cool their overheated stock market, plus a number of large IPOs that have sucked funds out of the markets and sent them tumbling. But the anecdotal evidence shows that Greeks might have a reason to start taking bitcoin seriously.

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