Greece Turns to Bitcoin Amid Economic Turmoil

Greece’s precarious economic situation has made it incredibly difficult for companies and individuals to operate normally amid strict economic controls.
In response, Greek citizens are looking to bitcoin as a way to maintain control over their finances. Many view the currency as a new form of “digital gold.”

Tough circumstances for small companies

According to CNBC, the Greek government has implemented capital controls that limit domestic investors from withdrawing more than 50 euros per day from Greek banks. This restriction has been particularly hard on small businesses that need to pay or issue bills in order to stay afloat. As these companies struggle to gain access to cash, more and more of them are looking to bitcoin as a possible solution.

It is difficult to know how many Greeks are using bitcoin due to the decentralized, anonymous nature of the currency. However, this summer’s bitcoin price increase has been linked to the Greek economic crisis. Back in June, Reuters quoted Vaultoro.com Co-Founder Joshua Scigala as saying that Greeks were turning to the digital currency as their faith in the government was shaken. He stated that people were no longer waiting for the government to figure out an exit plan, and instead were taking the financial situation in their own hands. “They’d rather hold money in a private asset like gold or bitcoin,” Scigala concluded.

Bitcoin the new “digital gold”

As Scigala’s comment implies, bitcoin and gold are seen as similarly valuable commodities during periods of governmental and economic instability. Indeed, as Grayscale’s Michael Sonnenshein told the Investing News Network, “many investors are starting to think about bitcoin as a form of digital gold. There’s a lot of overlap in attributes in bitcoin and gold, both being scarce … and divisible.”
However, “where people start to see the superiority of bitcoin over gold is the fact that bitcoin real has utility.” The digital currency can be used to pay bills and purchase goods and services, just like a traditional currency. That on-the-ground utility may explain why Greeks are increasingly looking to bitcoin during these tumultuous times.

BTCGreece to roll out bitcoin ATMs

Thanos Marinos, founder of Greece’s first bitcoin exchange, BTCGreece, is eager to help Greece adopt the digital currency. He sees a clear demand for increased access to bitcoin across the country. Last month, he told Bloomberg Business that bitcoin demand had increased by 500 percent in the past four weeks.
His company is currently collaborating with European bitcoin platform Cubits to eventually install upwards of 1,000 bitcoin ATMs across the country. For now, however, Marinos is keeping his goals slightly more modest. He told CNBC: “[i]t is part of my vision to create a block chain ecosystem in Greece. If all goes as expected with no major issues we will launch first ATMs October 2015.” Should this launch be successful, companies will find it much easier to accept bitcoin transactions as an alternative to the euro.
 
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.
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