Slashdot Mirror
Greek Financial Crisis Is an Opportunity For Bitcoin
An anonymous reader writes: Greece's economy has been in trouble for several years, now, and a major vote next weekend will shake it up even further. The country can't pay its debts, and the upcoming referendum will decide whether they face increased austerity measures or start the process of exiting the Euro. One side effect of the crisis is that alternative currencies like Bitcoin suddenly look much more attractive as the "normal" currencies become unstable. "Tony Gallippi, the co-founder of bitcoin payment processor Bitpay, tweeted on Sunday night that he expected the price of bitcoin to rise to between $610 and $1,250 if Greece exits the Euro. The currency is currently worth $250. Part of the reason why the crisis is so tempting for proponents of the cryptocurrency is the echoes of a previous crisis in the Eurozone: the banking collapse in Cyprus in 2013, which saw that nation also impose capital controls to prevent massive outflows of currency from the panicking country. That collapse came at the same time as the first major boom in the price of bitcoin, which began the year at less than $20 and peaked at ten times that by early April – before it all came crashing down."
Yeah. Actually Bitcoin is a terrible idea. To replace one deflationary currency they can't print (Euro) for another (Bitcoin).
No my dear friend. It's fiat currency they need right now.
Exiting the Euro gives them some control over their destiny.
A country that is in such poor economic shape generally has it's currency devalued. This has two effects: first, imports are suddenly more expensive; and second exports are suddenly cheaper for the rest of the world to buy. As the economic mess cleans up, you have a capital inflow into the country, liquidity frees up and things get better.
Now Greece (or any other country in the EU): They don't have their own currency; they use the EU's. So they can't allow their currency to devalue; they are dragged along by the strength of the German economy, which effectively determines the value of the Euro. They can't control their economic destiny.
Exiting the Euro may be the only option to give the Greek economy exactly what it needs: a savage, sharp recession to flush out all the inefficiencies and get back to making stuff and exporting it. Or just producing enough for domestic consumption; that'll do. Staying in the EU probably means that it's going to be a long, drawn-out and painful process.