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."
"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. "
In hopes of getting everyone to quickly buy Bitcoins so it actually rises and he can sell. Nice try.
>> alternative currencies like Bitcoin suddenly look much more attractive
The problem most Greeks suddenly face is that their money is now locked up as electronic balances in banks that have shut down for a week and won't let them have more than 60 euros at a time. After crises like this (even America's own "great recession"), people tend to prefer forms of money are more than just bits or fiat paper, such as gold and silver.
The greek financial crisis was brought on by a neoliberal government that promised the moon and stars, never collected tax, and drove itself into bankruptcy by securing loans (some predatory) that it could never repay. 23 years of national economic policy are coming home to roost, much as they did in the united states during the housing collapse, except the frameworks are radically different.
Greeks aren't generally accustomed to paying tax. Free medical and social services, some wildly more generous than the average western nation, are normatives they enjoy, and expect to enjoy regardless of income. shifting greece from a two decade model of tax evasion to even moderate tax reform will be met with cars burning in the streets because the average greek voter isn't privy to the fact that the government, in order to remain popular and in power, basically spent itself into oblivion.
exiting the euro may be the cure. Greece seems to be a country that doesn't consider capitalism in the western sense. theyve shunned the world bank strategies of privatized education and water. Evergrowing GDP. endless investment, and cloistered monied elite don't necessarily factor into the countries priorities. It will be a hard road for greece because many other nations will be very reticent to trade after an exit, but it will also afford numerous opportunities for local industry to emerge and thrive.
Good people go to bed earlier.
I know when my country is looking at economic collapse I'd look to move all my money into a currency that's going to double-quintuple in value nearly overnight. That's the stability I want and look for. Plus think of the literally 2 or 3 actual real retailer in the country that even know what a bitcoin is, let alone accept it for payments that I'll be able to spend my new found wealth
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 and face even worse austerity.
FTFY.
Leaving the Euro will mean that the country has defaulted, and whatever currency they put in place will have no value at all. The government will be bankrupt and will not be able to pay civil servants or pensioners. There are only 3 ways this goes:
- Creditors accept to write-off some of the debt. They cut their losses and allow Grece to survive, in a situation which is actually bearable.
- More austerity, from inside the euro. Hard times ahead.
- Default. Chaos, Civil War.
Humanity and Finance don't go together very well...
One side effect of the crisis is that alternative currencies like Bitcoin suddenly look much more attractive as the "normal" currencies become unstable.
Bitcoin will not be more stable or attractive than other currencies including the dollar or probably even the euro except in some weird corner cases. If someone is putting money into bitcoin because they think it is even relatively stable then they are an idiot. If someone wants to use bitcoin to transfer money then there is a relatively small risk there but you'd have to be pretty dumb to just buy and hold bitcoins for any substantial length of time. Even if Greece does exit the Euro it isn't going to make bitcoin meaningfully more sensible than it already is. If someone wants to swap currencies to hedge against currency fluctuations I can think of a huge number of options I'd consider long before bitcoin for that purpose.
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.
I rest my case. If it can go up that fast then it can (and probably will) go down just as fast. Bitcoin is not a place anyone should be comfortable keeping their money for long unless they are speculating.
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.
>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.
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.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
Right. The article makes no sense. The Euro isn't collapsing, Greece and its banks are. If you have the Euros with which to buy bitcoins, you're better off keeping the Euros. Just don't deposit them in a Greek bank.
Moderating "-1, Disagree" is simple censorship. Have the guts to post your opinion.
No, you see, you are looking at it wrong. Bitcoin *is* stable, it's the other currencies that fluctuate wildly (yet almost perfectly synchronised with each other for some reason which probably has to do with them being fiat currencies).
Trying to push bitcoin only shows that the author has a poor understanding and an agenda. While you could, potentially, argue bitcoin in cases where a country's currency has collapsed, or is unable to be used to buy things from other countries. Bitcoin is highly volatile, a very poor store of wealth, but it is something you can spend and transfer, in some places at least, and at present it has value.
Well, that isn't an issue with the Euro. It is an extremely important and widely used currency, second only to the US Dollar. All Eurozone countries use it (by definition) which is quite a few major economies. As such it is also widely sought after in international currency exchanges. Euros are very easy to spend on the international scale. Many places will take them directly, and any bank will convert them.
Also the Euro is pretty stable. When you look at it compared to other major currencies like the Dollar, Pound, and the Yen it compares very well. All fluctuate, of course, but not very quickly. So it is a good store of value, you don't have to worry about losing your money. Works long term too, as many nations with good credit will sell debt instruments in Euros.
So there is nothing bitcoin solves here, because bitcoin is a currency and currency isn't the problem in Greece. This isn't Zimbawbe where the currency was worth nothing.
The only way it could "help" is to move money out in the event of capital controls on Greek banks. But of course:
1) You have to get the money out of the bank first, which a capital control can slow down.
2) The only way it facilitates that would be being less traceable. As I said, Euros are taken everywhere, you can convert them to Dollars or anything else.
3) Most importantly that wouldn't help the situation at all, it'd make it work. Might help an individual save money, but it would only worsen the situation.
Anyone who uses something as volatile as Bitcoin as a long-term store of value only has themselves to blame when things go south.
For me, personally, Bitcoin's primary utility is as a medium of exchange, not as a store of value. Thanks to Bitcoin-based and similar low-friction (read: low transaction fee) means of exchange, I can buy stuff from merchants that accept BC without dealing with typical currency-conversion fees. If I'm a seller, I can sell without dealing with the typical merchant fees associated with credit cards. Then again, I have the advantage that my nation uses a currency that is, for the time being at least, considered one of the world's major stable currencies.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
You should trust trustworthy algorithms, not just all algorithms. Bitcoin in particular is a pyramid scheme algorithm.
"Thing is, the one who stole money is Greek government."
Yes. With the enthusiastic help of French and German governments and Goldman Sachs.
It is not that it's some kind of a secret but, still, I find amusing that the obvious fact that current Greek situation was a well planned trap of central/northen Europe and economical lobbies against south Europe economies doesn't gather but a fraction of mindshare than the "Greeks must pay" and "Greeks lived above their means".
Just some examples:
* Greek economical situation was falsified by Goldman Sachs, so Greece apparently reached the required levels to enter de EU and Euro currency. German government knew it (and even now, Mario Draghi, GS ex-consultant is current head of the European Central Bank). Still, I don't see anybody asking Goldman Sachs for billionary fines and compensations.
* Greece can't (partially) default its debts, not at least within the monetary union, still Greece hasn't still seen a dime of Germany's war compensations (I'm not even going into it's legal weight, but the obvious fact is that this helped to develop Germany's economy and now Greece is in a position to be returned the favour). Double standard anyone?
* Greece spends a quite above average percentage of its GDP on defense (at about 2.5% -a percentage significant enough as to put an end to Greece's crisis on its own), mostly on weapons bougth to... Germany and France, mainly to protect European interests on the zone. Do you know what Germany and France are *not* saying? They are not saying "return me back our planes and tanks, which are well above the level you need for self-defense, and so part of your debt gets settled".
* Most of the money lent to Greece isn't going to support Greek economy so it can go stronger, produce more taxes and return the debt but it is going back to Germany and other northern European countries and to support the Greek *private* banking system (again an example on the 'privatization of benefits but nationalization of loses', some "liberals" are so keen of). Even IMF concludes that no more than 11% of lends ended up being used to support the country's operations.
All this has not to be understood as if the Greek people voluntarily decided going that path (rising defense expenses to 2.5% of GDP, allowing Goldman Sachs to falsify the accounts, giving public contracts to cronies, etc.). This all was the result of a corrupt government with aquitance of (mainly) German government and banks, which are the same that now tear their robes in anger.
No, it was not that the Greeks were expending abover their means, it is that Germany -with the help of Greece's corrupt politicians, was robbing Greeks above their means and now Germany tries to hide their tracks just by shouting up loud.
Using Bitcoin to trade doesn't make any more sense than using Google or Apple stocks to trade (with the difference that Google and Apple stocks fluctuate less rapidly in value). Oh, and the state-controlled water companies and the mostly state-controlled electricity company of Greece () accept payment only in Euros. And the special tax on all fuels (heating diesel, vehicle diesel, gasoline, LPG and CNG), which is seperate from VAT, is paid in Euro only, so gas stations have to charge in Euro. Even in if everyone else decides to sell you stuff Bitcoin, you still have to use Euros to live. BTW, if a country's currency become worthless (like a new Drachma will be), people typically use US dollars (see Zimbabwe), not obscure libertarian cryptocurrencies. Sorry.
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.
putting the 'B' in LGBTQ+
Not long ago, value of Bitcoin was around $1200. Now it is around $250.
Anyone buying Bitcoin for stability is too stupid. Anyone suggesting that the value of Bitcoin is about to rise to $600 or $1200 is attempting to pump the price in order to dump their holdings.
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.
There is no such thing as a magic currency that any country can use to turn worthless promises into something of value. Well, maybe the dollar, but only if you're the U.S.
The fact is that Greece can leave the Euro and print all the money it wants. But that money is going to be as worthless as the paper it's printed on and everyone will know it. No one is going to accept it for anything of value. And no one is going to loan them anything of value. So they'll be like Germany in the early 1920's, with piles of worthless paper money and a black-market/barter economy.
At the end of the day, you just can't keep spending more than you take in. It's going to collapse at some point. Greece is one of the most notorious countries at doing this, and so they're the canary in the coal mine. But the same thing is going to follow for the U.S. and many other European countries if they don't find a way to balance their budgets. Eventually the credit card bill comes due and the creditors just won't loan you any more money.
SJW's don't eliminate discrimination. They just expropriate it for themselves.
Check out post-WWI German and Austrian Notgeld for one of the first 'fringe currencies' in general circulation.
Tiller's Rule: Never use a word in written form that you've only heard and never read. You will end up looking foolish.
You should trust trustworthy algorithms, not just all algorithms. Bitcoin in particular is a pyramid scheme algorithm.
Yes- but you can trust it to be a pyramid scheme algorithm.