Greece missed a 1.7 billion dollar payment to the International Monetary Fund this week. The country's residents are exploring bitcoin as a hedge against a possible eurozone exit. Major cryptocurrency
Greece missed a 1.7 billion dollar payment to the International Monetary Fund this week. The country's residents are exploring bitcoin as a hedge against a possible eurozone exit. Major cryptocurrency exchanges worldwide reported spikes in trading volume and new account creation from Greek users.
Bitcoin.de in Germany saw its Greek user count increase tenfold. Bitstamp, the UK-based platform that ranks as the world's third-largest bitcoin exchange, recorded a 79 percent jump in trading activity from Greece. Bitcurex, a Polish exchange, received an onslaught of inquiries from Greeks asking whether bitcoin operates as legal currency within the EU, whether they could use the platform as a bank account substitute, and if the exchange runs ATM networks in their country.
The pattern reached Chinese markets too. LakeBTC noted a 40 percent rise in visitors from Greece. Coinbase, which has secured substantial venture funding, reported a 300 percent increase in bitcoin purchases across the European continent.
"One of the main benefits of bitcoin is that it allows people to take control of their own wealth," Coinbase said in a statement. Fred Ehrsam, co-founder and president of Coinbase, told Fortune: "There's little that [bitcoin companies] can do for people on the ground in Greece. The bigger deal here is if you're sitting in Italy, Spain, or Portugal, and you're getting a little nervous, maybe it makes some sense to put value into bitcoin where you're less susceptible to these things. The doomsday way of saying it would be, 'Do it before it's too late.'"
Greece locked down its banking system and imposed capital controls this week. Citizens can withdraw a maximum of 60 euros daily and cannot send money or make payments abroad. Bitcoin, which operates without government regulation or oversight, appeals to Greeks seeking to access and manage their funds.
Acquiring bitcoin within Greece remains difficult. A single bitcoin ATM operates inside a bookstore in the city of Acharnes. Greeks can trade with others through services like LocalBitcoins, a peer-to-peer platform.
Bitcoin's price has climbed during the crisis. Trading at 257 dollars per coin according to Blockchain.info data, bitcoin has gained 17 percent over the past month.
Greece's government failed to meet the IMF's payment deadline early today. Without voter approval of a new bailout package from European authorities and the IMF, Greece faces a likely departure from the euro. Economists warn that switching back to the drachma would slash Greek purchasing power by some 40 percent.
Valentin Marinov, who leads Group of 10 currency research at Credit Agricole CIB, explained the stakes to Bloomberg. "One of the reasons we believe that the Greeks want to stay in the euro, and will ultimately do, is the heavy economic toll that their economy will have to pay under Grexit. […] Depreciation involved is of the magnitude of 40 percent against the dollar [after 12 months]."
