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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."
I think his point was that you'd have physical access to it, yknow, to buy physical bread and milk.
Depends on who's running the bank, doesn't it? The value of gold and silver fluctuate with supply and demand worldwide. They have industrial and decorative uses and a widespread base of people willing to own them. In the absence of large-scale deep-space asteroid mining technology flooding the market with excess supplies, they're going to remain fairly valuable.
A well-run bank can do much better (the value of its currency remaining approximately constant over time) but once you start instituting capital controls and swapping out the nice currency for shitty drachmas then it's another matter.
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That is only if it buys bread and milk. The trouble Greece and most of the modern world has is that its entirely dependent on international trade. Greece can't meet its needs by itself. I am not an expert on the Greek economy. Lets charitably assume they can feed themselves. What about all the drugs that are not manufactured there that many depend upon to live for example? Can a private individual order drugs from across the boarder with gold coins? Can a pharmacy or hospital buying in quantity for that matter?
Sure there are exchanges for gold abroad, ultimately the answer is yes; for some quantity of gold you can obtain enough Euro to buy what you need. Now if the banks are closed where you are that might mean sending someone abroad to physically execute these transactions where trading desks and banks are open.
If the economy becomes truly unhinged, people stop working, stores close, etc than gold really is not all that great. If I am hungry and you are hungry, and neither of us imagines that changing anytime soon do you think I'll trade my pound of cheese for your gold?
I am supportive of a gold standard in general because I think inflation and debt based currency is an insidious trap used to enslave all of us. A gold standard would prevent the vipers from manipulating things and causing recessions that last half of peoples productive lives, it would reduce inequality, it would reduce war, in exchange for more frequent smaller booms and busts. In short it would shrink many of the worlds problems. If you already have problems like Greece does it won't provide some magic fix, don't have any illusions about that.
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That's incorrect. Gold fluctuates pretty wildly with mass hysteria, compete with massive deflation and inflation. Much like bitcoin. Prior to the 20th century, when communication wasn't quite so instant and pervasive, gold did a pretty good job because it was rare for *everyone* to panic more or be more confident all at once.
XML is like violence. If it doesn't solve the problem, use more.
>Bitcoin is the world's first fringe currency.
pretty sure it's not.
There have been many fringe currencies. From company chits to Disney Dollars, there have been many fringe currencies throughout history, It's just that the term had yet to be coined.
Sorry, teleporters just kill you and then make a copy. A perfect, soul-less copy.
Yes, you can. It's called derivatives. Sell silver you don't have, buy gold that nobody has, eat your heart out. They can send the price pretty much anywhere they like.
Commodity-backed money, such as actual precious metals or precious-metal-backed-depository-receipts (or even gold-backed bank notes) from an institution that people trust, can be functional currencies in places where the currency is unstable and local laws or customs don't prevent it.
Heck, even in the Untied States of America, the US Constitution specifically allows states to mind gold and silver coins and declare them legal tender. In practice, this is not needed because relative to the cost of most goods and services, the US dollar is at least as stable as gold and silver, and declaring gold and silver as "legal tender" while maintaining a floating exchange rate with the US dollar would mean merchants who took both would have to re-price things in real time to prevent arbitrage-buyers from disrupting the system. However, it the US Dollar ever has runaway inflation, the option for states to declare gold and silver legal tender would make the option of having "stable" prices in gold or silver and "adjusted-by-the-minute" prices in US Dollars attractive.
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Go on then mate, you put your money in fiat currency. Me personally I trust algorithms not politicians.
What the hell are you talking about?
Argentina was in much worse shape than Greece in 2001. We restructured our debt (basically: screw you i ain't payin that). And guess what? We can get loans.
At a ridiculous >10% annual rate, while our neighbors get it for less than 3%.
But we can get loans. Never underestimate the greed of capitalists.
Eh. Don't oversell the old gold standard. For starters, a gold standard was typically a steady and persistent malaise of deflation, as economic output increased more steadily than the money supply. Second, this was punctuated by Fun Fun Fun bouts of inflation when something like a gold rush happened or someone colonizing the new world discovered new mines overseas. Third, the metallic standards' troubles were amplified when regimes inevitably tried to do something stupid like have currency in both gold and silver with the price ratio fixed, invariably leading to a straightforward application of Gresham's law where the overvalued money drove out the good (sometimes merely hoarding the good money, other times trading it out of the country for a better deal).
The World Wide Web is dying. Soon, we shall have only the Internet.
Besides, gold has never been a good money substitute except for the very rich, and they probably already have their wealth stashed away some place abroad. Gold's value comes from having lots of it. If you want to buy a house having a few pounds could help you. But if you have just a few ounces of gold, how would you spend it? Shave it to buy a loaf of bread?
Exactly why the idea of a digital gold would be useful - no concerns about divisibility or spending it in places where you can't be physically present.
Interestingly, the National Bank of Greece is one of the eurozone institutions that has the facilities to print Euro bank notes.
Since November they have printed more than 13 billion euros of bank notes (against ELA funds) which Greeks are now storing under their mattresses.
One wonders what sorts of contingency the EU has for this. It would be the ultimate middle finger to the EU if Syriza decided to solve the ECB imposed liquidity crunch by literally firing up the printing presses, yet a uniquely convenient thing to do when stuck in a currency union. Normally, the ECB could punish them by cutting of access to the TARGET2 settlement system, but this is basically already the situation now with the ELA funds running dry and capital controls in place.
What a circus this could become.
I keep asking this question and no one seems to have a good answer. How can an economy as small as Greece's; or for that matter Italy's and Spain's; send global markets and economies as big as Germany and the US into a tailspin? There is somethings very wrong with our financial and economic policies. All this tight binding of economies and fifnacial systems seems to be a recipe for disaster.
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If a Greek citizen can buy a bitcoin, the same person can buy Euros, Dollars, or stock index funds, all of which are more stable. The author of this must be either financially ignorant or hyping bitcoins.
It's simple. The world needs some form of commodity money (as opposed to fiat money) to fall back on during times of extreme financial stress. It has to be something which can't be freely "printed" or duplicated with the click of a mouse like fiat currency. It's value needs to be derived from market forces, i.e. supply and demand, not government policy. It needs to be durable, fungible, divisible, rare, universal, and proven. It needs a high density of value, i.e. able to store significant value in a compact form.
Only one material in the world meets these requirements. That material is gold, and it couldn't have been any other way. None of the other precious metals meets all of these requirements. Other commodities are inappropriate for obvious reasons.
For those who don't believe this, look no further than the world's major central (government) banks who each hold tons of gold. They're not doing it to look cool. In fact, they generally prefer not to make a big deal out of it. Gold's intrinsic value isn't the glitter aspect or the few industrial uses it has; it's the fact that gold is money and has been for thousands of years.
As a side note, gold probably wouldn't be a suitable means of trade during armageddon scenarios as many people (mainly detractors) claim. For that purpose, you'd be much better off with junk silver (google it). Gold, especially physical gold, provides protection against financial catastrophe, not physical catastrophe such as war or natural disaster.
Check out post-WWI German and Austrian Notgeld for one of the first 'fringe currencies' in general circulation.
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