The Greek Debt Crisis And Bitcoin

Is bitcoin the way to avert Greek's debt crisis?

Well, if you simply look at the price of bitcoin – which has been rising in lockstep with the intensity of the crisis – you might be tempted to say yes.  

Since late last week, bitcoin prices have begun to surge. However, most speculate that it's more than a coincidence that is happening at the same time the Greek debt talks took a plunge.

"[Bitcoin] had been middling around the $235-$245 range for several months, and all of the sudden this crisis escalates and you've gotten yourself a nice 10-point pop," Brendan O'Connor, CEO of digital currency-specialists Genesis Global Trading, told CNBC. "I don't think it could be for any reason."

Around midday Thursday (July 2), bitcoin's price was just above $254.

But across Europe the bitcoin volumes are surging, other reports say.

“Volumes in the last 48 hours have been about 300 percent higher than they have been,” Fred Ehrsam, co-founder of Coinbase, told Fox Business, adding that this means consumers are “becoming aware of what it really means to have money in their bank account."

Bitreserve's new CEO, Anthony Watson, also said his company has seen an uptick in bitcoin activity as it relates to the euro. Interestingly enough, there's been more consumers looking at fiat currencies and gold investments via Bitreserve, Watson said. He also pointed to the fact that there's not a general awareness of what exactly bitcoin is in Greece.

"Laypeople in Greece don’t know what bitcoin is. They are still struggling with the concept of what a cryptocurrency is,” noted Watson, who also admitted that during a time of crisis, people might be less likely to trust a currency that has immense volatility — saying that bitcoin "bounces around like a jack rabbit."

The Greeks, at least the general population, may not be familiar with the digital currency, but its financial crisis has certainly started conversations about the role of bitcoin and the blockchain on a global scale.

"To see the future of finance, we must look beyond the currency use case for bitcoin and blockchain technology. It is encouraging to see that this relatively small crisis has not only highlighted one of bitcoin's use cases and has caused the price to rise. Imagine what bitcoin would be worth when all the use cases are realized," wrote Brian Kelly, founder and managing member of Brian Kelly Capital LLC, a global macro investment firm, earlier this week.

"Using blockchain technology (the technology behind bitcoin) there is a simple and elegant way for Greece to monetize assets and pay government employees," Kelly wrote in an op-ed piece  for CNBC in May.

Two months later he’s sticking by his story — as the discussion about how the blockchain could play a role in Greek's financial crisis continues.

"The Holy Grail of safe-haven assets would be a digital currency that is backed by gold, but this does not exist … yet," he continued. "The bottom line is that when it comes to safe-haven assets, gold is for currency crises and bitcoin is for political crises."

Kelly said he checked with his bitcoin-exchange contacts, all of whom told him they haven't seen an increase in consumers buying bitcoin as a result of the crisis, but that doesn't mean the talk about Greece and the bitcoin solution hasn't played a role in driving up its price.

Ironically enough, bitcoin — volatility and all — has been viewed by some bitcoin enthusiasts as a safe-haven during times when physical currency might be difficult to get their hands on. As Kelly points out, there's been plenty of speculation that people in Greece would rush to buy bitcoin, but in reality, there's one problem: How can people who can't access their bank accounts buy bitcoin?

“The fact that their ATMs have no cash tells you a lot about how digital currency could be important,” said James Robinson IV, managing partner at RRE ventures, told Fox Business.

The Bitcoin Disconnect In Greece

But again, other researchers say they can't imagine it's the Greeks themselves driving up that price. More likely, it's the tech-savvy Europeans who were already into bitcoin seeing a time to capitalize on the digital currency's potential. Eli Dourado, a research fellow at the Mercatus Center at George Mason University, told Fortune there's no evidence that Greece's cash-centric population, which is more worried about getting their cash out of the bank, is rushing to buy bitcoin.

“Greeks probably should have been buying bitcoin six months ago,” Dourado said.

He also asserted that bitcoin's "surge" isn't so much of a surge after all. In fact, he said, bitcoin hasn't seen much volatility in the past sixth months.

“I think we are seeing a boomlet in global demand as a hedge against any kind of uncertainty, not just [the uncertainty] in Greece,” Dourado said in the Fortune interview. “I think the value of the concept is being affirmed. I would also note that it doesn’t take a huge increase in interest to move the bitcoin price, so I would be careful about overselling the increase in price over the last couple weeks—it’s still a pretty modest increase.”

While it's not likely the Greeks rushing to pick up bitcoins, other blockchain experts says there is potential behind the blockchain for Greece — but the digital currency has a long way to go before it's going to gain acceptance in the country.

“It’s money the government can’t touch. If I were a Greek citizen right now, I’d be scared out of my mind," he also told Fortune. "The fact that you can put your money in bitcoin and wait out what happens is very useful. Given the choice of a Greek bank, or bitcoin, I’d take bitcoin all day long.”

Still, for now, he said, most Greek citizens are probably asking: "what's a bitcoin?"

They aren't alone.

 Bitcoin Tracker Week 80

The Good, The Bad — The Top 10 Bitcoin Stories Of The Week

Kraken Cracks Into The Canadian Bitcoin Market (June 29, 2015)

  • Kraken, the San Francisco-based bitcoin exchange, has made its way into Canada with the help from its latest partner, risk management specialist Vogogo. That means that the bitcoin exchange can help Canadians convert currency into digital currency with the help of Interac e-Transfer and electronic fund transfers.

Bitcoin Gets Its Gaming Face On (June 29, 2015)

  • How do you get people to care about bitcoin? Make it fun and turn it into a game. That's what's happening with the popular game Minecraft, which now has added bitcoin as an aspect in the game as a currency option for the virtual characters. That money, once earned, can also be cashed out to be used in real life, too. Forget those little gold coins in classic games — bitcoin might be the next wave of currency for the gaming world.

The Legacy Lives On: Silk Road 3.0 (June 30, 2015)

  • Oh yes, it's back. At least from the looks of an article published by the International Business Times this week, Silk Road 3.0 is up and running — with no plans of leaving anytime soon. Silk Road 2.0. was shut down after another person was arrested, but the people running as the new "Dread Pirate Roberts," say they're continuing on with the site. An anonymous Silk Road 3 employee told IBTimes UK that "we decided it was upon us to continue the legacy, and called Ulbricht's 'tragic fall,' and subsequent life prison sentence 'despicable and inhumane.'"

Silk Road Investigator Pleads Guilty To Stealing Bitcoins (July 1, 2015)

  • Just when you think the Silk Road case is in the books, there's more headlines. Carl Force, a former DEA agent who was on the Silk Road case admitted to stealing bitcoins during the investigation. He also admitted to soliciting bitcoins directly from Ross Ulbricht, the creator of the site. Last month, Shaun Bridges, a former Secret Service agent who was involved in the Silk Road investigation, plead guilty to money laundering and obstruction of justice charges.

Was The Bitstamp Bitcoin Exchange Hacked? (July 1, 2015)

  • New reports indicate that employees of Bitstamp, the bitcoin exchange, have been hacked — leading to a theft of $5 million worth of bitcoin. That report suggests that somewhere around 19,000 bitcoin were stolen earlier this year. The company, according to a report, has been mum on details of the hack.

"Buy Now" Button Now Available For Bitcoin (July 1, 2015)

  • Coinkite, the bitcoin wallet, has added a "Buy Now" button that enables online merchants to push on their eCommerce sites. With this capability, it allows eCommerce providers to offer yet another quick and seamless way to let their customers pay in just a few clicks.

Bitcoins Now Available For Sale...At Local Stores? (July 2, 2015)

  • Milk? Check. Toothpaste? Check. Bitcoin?...Check. Yes, at least for consumers in Spain, bitcoin will be easier to buy in local stores. With the help of Coinay, 3,000 stores will help people buy bitcoin in their local neighborhood shop. The service works by providing a shopper with a voucher that is later redeemed for bitcoins.

Bitwage and Bitreserve Team Up For Cloud Savings (July 2, 2015)

  • Bitwage, a company that allows a portion of a employees payment to go into an account that is paid out in bitcoin, has launched a cloud savings option with Bitreseve. This allows those with bitcoins to temporarily store them in the cloud as a safe way to put away a little extra money.

Bitcoin Foundation Loses A Whole Lotta Bitcoin (July 2, 2015)

  • The Bitcoin Foundation has neared extinction and new reports about its dwindling membership and losses show why. A new report shows that the Bitcoin Foundation's losses hit $4.6 million, which breaks down to about 5,800 bitcoins (lost in a 10-month period). While reports show that the Bitcoin Foundation is going to call it quits, there hasn't been much movement since.

World's First Broker-Based Bitcoin Marketplace Launches (July 2, 2015)

  • Coinfloor, the U.K.'s largest bitcoin exchange, has announced the launch of the world's first broker-based bitcoin marketplace. This will allow U.K. retail investors and consumers to buy bitcoins. And according to the company it enables them to "gain exposure to digital currency innovation in a secure environment." In fact, Coinfloor CEO Mark Lamb remarked that "just as the NYSE was committed to a decentralized network of brokers backed by a centralized exchange, Coinfloor is the first institution in the bitcoin industry to mirror this proven model."





The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.