Bitcoin

No, the Greek Banking Crisis Isn't About to Turn the Country Into a Bitcoin Paradise

If there ever were any Greeks to speak of transferring their savings into bitcoins, chances are most have stopped.

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"[T]he demand [for bitcoins] in the last four weeks has risen by 400 percent and the number of newly registered customers by 600 percent," Thanos Marinos, who operates Greece's only Bitcoin exchange, told CoinTelegraph.

Marinos' "400 percent" statistic has appeared in a slew of news reports, including outlets such as Reuters and the International Business Times, which assert that Greeks are pouring their money into cryptocurrency to protect it from the government.

"Greeks are rushing to Bitcoin," was the headline of a particularly flimsy CNN Money article that starts running out of gas for that assertion by its fourth sentence.

When sources with a clear interest in stoking a particular narrative talk in percentages without also providing a baseline number, reporters should fold up their spiral-bound notebooks and boldly tell their copy-hungry editors the bad news. In other words, if there were just one registered customer in Greece's Bitcoin exchange last month, and now there are five[*] registered customers, that's a 400 percent increase. And let's not forget that registered costumers often don't end up buying anything.

The first Bitcoin ATM in Greece ||| Easybit
Easybit

If there ever were any Greeks to speak of transferring their savings into bitcoins, chances are most have stopped. The easiest way to acquire bitcoins is through an online exchange like Coinbase, which involves paying in fiat currency with a credit or debit card. But Greek banks are currently blocking their customers from making online payments.

A small bookstore outside Athens did recently install the country's first Bitcoin ATM, which accepts cash. But with Greeks limited to withdrawing just 60 euros a day, who's going to want to trade his or her precious cash for a currency that can't be used to buy food and fuel? An employee at the bookstore with the Bitcoin ATM told eNews Channel Africa that "[s]ince…all hell broke loose, there has literally been zero interest."

The problem is the same one that arises in just about every potential Bitcoin use case: As long as dealing with cryptocurrency requires constantly interacting with the traditional banking system, bitcoins will mainly serve as just a way to store value—and a pretty lousy one at that because of their price volatility. The point of exchange between bitcoins and fiat currency severely limits the cryptocurrency's usefulness because governments use it as a chokepoint to gain control—either by effectively preventing people from buying bitcoins online, such as in Greece, or by subjecting companies that carry out these money transfers to a byzantine regulatory regime, such as in the U.S.

Bitcoin will only live up to its enormous promise when it can function as a closed system, meaning that consumers can purchase items at stores that accept bitcoins, which in turn pay their suppliers and employees in bitcoins, who in turn spend their bitcoins at other stores, and so on. The most exciting Bitcoin ventures are aimed at facilitating that transition, such as the Silicon Valley remittance startup, Abra.

I'm sure most Greeks would love to magically convert their entire economy to a currency that's beyond the government's reach, but getting there will require a tremendous amount of trust and liquidity. Unfortunately, a 400 percent increase in registered Bitcoin users over the last four weeks, or even a 400 percent increase in registered Bitcoin users over the next four weeks, won't come anywhere close to making that a reality.

[*] The original version of this blog post incorrectly stated that if there were "four registered customers, that's a 400 percent increase."

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  1. Any bump in the price is likely from places that are thinking they might be next (Spain, Italy).

    And maybe some fear buying from China’s fun, too.

    Nice to see it going up again, though.

  2. How would Greece function any better on Bitcoins than Euros? Their basic complaint is that nobody will give them currency in exchange for nothing,

    1. a currency that’s beyond the government’s reach

      Greece != the Greek government

      1. The Euro is beyond the Greek government’s reach in most ways. They could, until recently, issue more but they had to treat it like a loan and pay interest.

        And they have to pay their debts in Euros, not freshly printed drachmas.

      2. And yes the Greek economy does = the Greek government. They wanted a big state and lavish welfare benefits, so that’s what they got.

  3. DAMMIT, I WANT MY LIBERTARIAN/BITCOIN MOMENT!

    1. I CAME HERE TO YELL ALSO! I want my BITCOIN PARADISE NOW!

  4. There’s a diner I go to here that starting accepting bitcoin last year. I’ll have to ask the owner if anyone has used any.

    1. When I go to a diner for dinner, I prefer to use dinar.

      1. What ho! No love for dinero?

        1. Vietnamese deign to use dong as dinero.

      2. What do you mean? An Iraqi or Kuwaiti swallow dinar?

  5. “Bitcoin will only live up to its enormous promise when it can function as a closed system…”

    Which is why it will never happen.

    1. ^This^

      Bitcoin will triumph over fiat currencies when it is established as the one currency.

      It’s always oscillated between a creepy “One Currency to bind them all” vibe and a childish “I’ve got an idea! Let’s make a power/wealth vaccuum!” notion when I hear other people talk about it in this sense.

  6. So maybe someone can help me here:
    To trade between A and B, A offers up something of value to B, and B offers up something of value to A. For the trade to occur both parties value the other thing more than the thing they are offering. Otherwise, why bother.
    So now comes coinage: I value your chicken more than this 1 oz of silver. You need to buy feed for more of your chickens so you value the silver more than the one chicken. Voila! This is pretty cool because I don’t have to carry around 20 lbs of chicken feed to buy another chicken.

    Eventually of course we get to paper money, and finally fiat currency. Since our “dollars” are already arbitrary, and in many cases only represented by 1s and 0s, why introduce ANOTHER arbitrary currency called the “bitcoin”? What is it based on exactly? I get that it is independent of the government printing presses or central bank. But is that the only reason? It seems like alot of gods damned work to try to convince people that these 1s and 0s are worth more than “dollars” or “Euros”.

    1. Them thar Dollars got a whole bunch of guns behind ’em that say “oh yeah, we are worth something!’

      1. “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE, MUTHAFUCKER!!!”

        *M-2 bolt slams forward*

        1. Come to think of it, M2s or 50 cal ammo could be used for currency in most places in the world.

    2. Bitcoins were designed not to be fiat currency.

      1. And they have a limit built into the amount that can exist, yes?

        1. Right.

          1. That would be enough to alarm and disturb a government-by-printing-press.

    3. “I get that it is independent of the government printing presses or central bank.”

      Being beyond the reach of governments imparts enormous value.

    4. The key in bitcoin is digital scarcity — there’s only ever going to be 21 million of them (divisible down to very small fractions.)

      It doesn’t have the disadvantage of a physical hoard of gold that can be seized.

      A government can say who you can transact in dollars or euros with (the digital versions anyway, only to a certain extent with the cash). It can say what the value of them is.

      Bitcoin avoids those, and is a permission-less system for transacting.

    5. Re: BearOdinson,

      What is it based on exactly?

      It was based on blind faith, that there would be only a limited supply of Bitcoin and that it could provide the anonymity benefits afforded by cash without the hassle of handling cash. Especially the last part was found pretty quickly not to be even possible. Bitcoin has proven to be just another payment vehicle not unlike PayPal and credit cards, that’s all, with some buy-and-dump speculators fleecing a lot of amateurish investors who purchased the currency as an investment.

      1. Permission-less exchange of value *is* a huge differentiation from Paypal. There’s no place to pull an Operation Chokepoint on.

        Anonymity is entirely possible, at some cost of time, code, CPU, etc. Psuedonymity is reasonably achievable today.

        1. It’s not permission-less. You have to get permission from the peer network much like with credit cards, not to mention an ISP. And, thanks more to the latter, there are dozens of places to pull an Operation Chokepoint on. They’re the places/methods that point you to the exit nodes of the Tor network.

          It’s different from cash, wire transfers, and credit, but it’s not exactly head-and-shoulders above any of them and the only way(s) it becomes truly transformational in no way guarantees a transformation for the good. It’s an(other) engineering solution to a moral problem.

          1. I don’t think that’s really asking permission, though. Run it on a VPN in a place that doesn’t try to censor it. Run it with TOR hidden nodes and never have to hit an exit.

            Sure, there’s things that could be done like compelling ISPs to block access to the network, but that’s rather substantial level of tyranny, when considering that they don’t have the public support to do something like Operation Chokepoint in the open via congress (or they would have).

            I’m saying that Chuck Schumer can’t bluster all the ISPs into blocking access to the network. Could they do a law, if necessary? Maybe, but it would be a helluva imposition on what software people can run, and quite easy to ignore.

            1. Run it with TOR hidden nodes and never have to hit an exit.

              You mean like Silk Road *did*.

              You don’t have to shutdown the traffic and that’s actually counterproductive. It would be difficult to completely shut down any particular business via the bitcoin network (mostly because cash and credit), but the same is/has been true for any other currency. That’s not the point (at least, not a must) of financial crackdowns. Throttling an exchange would be more than sufficient to deter/disable trivial business and lock up serious amounts of money long enough to examine and/or follow. Considering the Public Utility decision ex cathedra, I’m dubious that they would need to pass a law to do any of it.

    6. Since our “dollars” are already arbitrary, and in many cases only represented by 1s and 0s, why introduce ANOTHER arbitrary currency called the “bitcoin”?

      subjective =/= arbitrary

      A dollar has subjective value. You go to ten chicken farmers, and 8 of them get more enjoyment from having an extra chicken than a dollar. 2 of them are willing to trade because the dollar is worth more than the extra chicken to them. However, the dollar is the dollar. It’s worth a certain amount to each and every farmer, it’s not arbitrary. It’s not like (all else being equal) the eight farmers would randomly decide to sell the chicken one day and not sell it the next.

      What is it based on exactly?
      Nothing, just like the Dollar, the Euro, gold, silver, wampum, and chuck e cheeze tokens. The value is psychological and based on risk factors and suitablity of use for trade. If people all decided tomorrow that they didn’t want to accept Dollars for trade, what’s the Dollar worth? Not even the paper it’s printed on.

      I get that it is independent of the government printing presses or central bank. But is that the only reason? It seems like alot of gods damned work to try to convince people that these 1s and 0s are worth more than “dollars” or “Euros”.

      I think that drives its popularity. I don’t know much about bitcoin, but the prospect of having a currency that inflates algorithmically is much better than the divining that the market does every time the Fed Chair speaks.

      1. “The value of a thing is what that thing will bring”

      2. What we regard today as “arbitrary” about the “d-o-l-l-a-r” is that it no longer “measures” anything specific. If the original name of the coins had been “ounces” or “grams” (and if nobody changed their usage in regular life as measurements for weights) this might not have happened, even with a government monopoly of the money – which even the Founders believed was not necessary.

        What is specifically valuable about bitcoin is its BLOCKCHAIN: the distributed public ledger of each Unit of Accounting, which is the “bitcoins” part. Once it is understood to have a finite quantity, then it can become the foundation for exchanging other assets and storing payments as well as transferring them securely. But it is not anonymous. The “value” it provides is the payments system so you can exchange assets with other people, and do it on-line. The assets on each side are the real “value” the people deal with. The Blockchain just communicates and records the transaction permanently.

        Another system called “Monero” offers an interesting algorithm for greater anonymity than Bitcoin’s blockchain provides.

    7. I appreciate everyone’s comments. The whole bitcoin movement just strikes me as the same as watching the Libertarian Party’s convention:

      “And now. The next President of the United States….. Harry Browne!” (With an entire Holiday Inn conference room in a standing ovation! Actually half a conference room, the had to partition it because the gay, left-handed Shriners had the convention the same weekend!)

    8. BTC have a known issuance rate, a lower counterfeit rate than USD, the ability to subdivide a whole coin into a hundred million subunits, and the ability to move money without minding distance at a rate orders of magnitude cheaper than competitors.

      For those who value these and other distinguishing features the currency has value.

  7. In other words, if there were just one registered customer in Greece’s Bitcoin exchange last month, and now there are four registered customers, that’s a 400 percent increase.

    That’s a 300% increase.

    1. Jim was told there would be no math involved.

    2. I came here to say that, and am disappointed it took this far into the comments.

  8. I’m sure most Greeks would love to magically convert their entire economy to a currency that’s beyond the government’s reach

    So… NOT Bitcoin, then.

    1. I’m sure most Greeks would love to magically convert their entire economy to a currency that’s beyond the government’s reach

      No, they would not.

      I’m sure most productive Greeks would love to magically convert their entire economy to a currency that’s beyond the government’s reach

      Just missed it by *this* much.

      1. I dunno, Marshall – they seem to be a rather tax dodging lot, the Greeks.

        1. Look where their tax dollars are going and you can’t really blame them.

      2. both productive Greeks…

  9. “When sources with a clear interest in stoking a particular narrative talk in percentages without also providing a baseline number, reporters should fold up their spiral-bound notebooks and boldly tell their copy-hungry editors the bad news.”

    IOWs, ‘doesn’t pass the sniff test’. And ‘fun with numbers’.

  10. “And let’s not forget that registered costumers often don’t end up buying anything.”

    What, even fabric, thread, sequins, feathers, beads, shit like that?

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  12. Actually an increase from 1 to 4 is a 300%, not 400%. 4 is 400% of 1 but it is not an INCREASE of 400%. Small statistical difference, but since the author is attempting to clarify statistics, it’s worth highlighting. It’s a common error in journalism.

    Stated differently… if a figure increase from from 1 to 2 is not a 200% increase, it’s a 100% increase. It goes up linearly after that 1:3 = 200% increase, 1:4 = 300%.

    Carry on!

  13. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.online-jobs9.com

  14. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.online-jobs9.com

  15. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.online-jobs9.com

  16. I think that Greek people are quite strange in their behavior. Of course they are trying to save their money with any possible means, but what have they been doing before this disaster finally happened? What did lead to these dramatic results? I think that the government of Greece should make all possible steps to prevent panic and explain people how to save their money and what steps to make. They should also know that there are top 5 online payday loans that can be useful in any financial emergency. However the government should also create available options for people to support them in such difficult time.

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