Bitcoin, Greece, speculation and headlines

Alternative currencies love a good crisis, and bitcoin is no exception. The price has been trending up for a month now, and of course commentators are attributing that to Greeks buying bitcoin. Of course, right? No idea whether they’ll be paid in euros or drachmas or roubles (if at all), so of course they’re buying bitcoins, the international digital money that is beholden to no government and knows no transaction limits.

Source: Coindesk

Source: Coindesk

The “majority of the Greek population is trying to move their funds to Bitcoin”, claims NewsBTC.com. (Really? Where did they get that from?) According to DigitalTrends, “Online Payments Halted in Greece, Citizens Eyeing Bitcoin to Protect Savings” – the article carries no reference to how bitcoin is too speculative to protect savings, and no data to back up the claim other than reference to a “flood” of information requests. It goes on: “Greeks are rushing to Bitcoin”, shrieks CNN. It’s frustrating when renowned journalists confuse a high percentage growth rate with a high number. 200% is a high growth rate, but not that material when you realise that you’ve moved from 2 to 6. The CNN article cites a 79% increase in Greek bitcoin trades, without specifying the starting point. According to German marketplace Bitcoin, 10x the number of Greeks are opening accounts than usual. Again, no actual statistics provided.

Getting practical, Cryptocoins News declares that “Greece is not buying bitcoin”. This sounds more plausible. While not based on actual hard data, it does highlight how difficult it would be for Greeks to buy bitcoin, unless they had already opened bank accounts in other countries. Which those that could, probably already have. Maybe they are buying bitcoins, but it will look as if the purchases come from elsewhere.

Buying bitcoins directly from Greece right now would be very, very difficult. Online transactions are at the moment blocked, and those taking their allowed €60 from the ATMs (when they can find an ATM with cash) will probably want to use it for things like, you know, food.

Max Edin of the exchange Localbitcoins told Coindesk that he “can’t see any notable increase in new registered users from Greece apart from normal growth.” Another exchange active in Greece, Kraken, reports the same.

Several Reddit feeds leave no doubt as to the limited opportunities for Greeks wanting to buy bitcoins now:

Sure, many bitcoin enthusiasts and exchanges are trying to profit from the Greeks’ plight.

It may be opportunistic, but it’s good marketing. Why not offer Greeks no administration charges on their new bitcoin wallets or trading accounts? It’s a good idea, and I don’t think that any of us non-Greeks will begrudge them this preferential treatment. Why not rush to set up a Greek exchange?

As for whether the Greeks should be buying bitcoins now… I’d say no. It’s still speculative, and while it looks promising, there is no guarantee that it will still be around a few years from now. True, the same could be said of the euro or the drachma or whatever currency the government chooses. But meanwhile, that currency will be usable and exchangeable.

Looking at the practical, non-speculative side, Bitcoin is not yet useful for daily life in Greece, as very few retail outlets accept it. As a holder of value, historical price fluctuations show that that’s a risky bet.

But, the increased level of interest is exciting:

Google searches for Bitcoin in Greece (source: Google Trends)

Google searches for Bitcoin in Greece (source: Google Trends)

And with the help of so many headlines, we could well see an uptick in Greek bitcoin wallets once the capital controls are lifted. But it will continue to be more speculative than practical. There’s nothing wrong with that, in fact the more people getting comfortable with Bitcoin, the more solid its base becomes. As long as the influx into the new currency is cautious and reasonable – a transactional collapse, a declining price and the disappearance of the value of Greek savings would not bring positive publicity to a still fledgling opportunity. Bitcoin needs to be seen as a practical solution, not a risky punt. Crazy headlines may enhance awareness, but they may also create unrealistic expectations which hurt everyone in the long run.

The spectre of Grexit and the sensationalist headlines are helping spread the Bitcoin word, not just in Greece, but worldwide. Will this make the price go up? Probably. Will the price then come down? Again, probably. The main impact on Bitcoin from the Greek crisis always was and continues to be speculative. Heightened awareness of Bitcoin’s relative stability (with all this going on, it’s surprising that the price has not fluctuated more drastically) will re-inforce confidence. Its philosophical refuge in political turmoil will attract interest. And many will spot business opportunities that increase liquidity and ease of use on the ground. Widespread use in Greece is not going to spring up overnight. But it will spread, and it will be useful, and it will further extend the penetration of Bitcoin into our collective financial psyche.

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