During patches of turbulence, pilots are trained to steer into the airborne trouble, much like when a driver encounters black ice. To increase the odds of coming out unscathed in either scenario, it’s critical to remain as calm as possible, even when all hell is breaking loose.
Greece is now in a slide and her citizens, young and old, are looking for ways to keep their savings intact. One of the solutions – and the solution beloved by the Internet – is bitcoin. In short, they are going to use BTC to fill in as a quick and dirty method to pull cash out of what appears to all the world as a broken financial system. Unfortunately, however, it the process is as fraught with peril as it with potential rewards.
In theory, bitcoin should work as a way to move money out of a failing system. The process of moving fiat currency to bitcoin and then back out to fiat currency, at least for small sums, is simple and already a viable alternative to traditional remittances. I use this process monthly in order to pay a contractor for a project I’m working on and everything along the line is perfectly kosher.
But what happens when an entire country – or a subset of a country – tries the same trick? First, you get a sort of financial race condition.
“The main issue if a currency collapses, is that capital controls prevent banks that hold large deposits of the currency becoming insolvent. It’s a basic function of the banking system,” said Michael Jackson, partner at Mangrove and previously COO of Skype. “Fiat BTC transfers would give the same issues. But for the customer, moving to BTC is a great idea. They just need to do it before anyone else.”
Sadly, not everyone can move their cash into BTC, especially when the banks are closed in Athens. An ecstatic Reddit thread points out that one-to-one and SEPA transfers may be a way to get money out of your bank account and into bitcoin but meeting a bitcoin lover on the street and handing over a few thousand euro might be a tough sell for many.
“The products that allow ordinary people to use bitcoin, to trust in the ecosystem and embrace the possibilities aren’t yet in place. In some ways, you could say that the millions of USD of VC money have yet to deliver end user benefit,” said Jackson.
Bank runs and the resultant desire to convert currency into something out of reach of traditional systems of governance are as old as time. Wars, government unrest, and even family troubles have forced people to convert cash to gold and jewelry and go on the run. But never before has it been this simple-seeming to take a handful of euros and dump them into a magical digital bank. But it is still nearly impossible for the average Greek to make it happen. In fact, the Greek tragedy is seen as a cautionary tale by the breathless bitcoin fans talking about the road forward.
“Greeks will awaken in the coming days to the sad realisation that the money they thought they had, in their banks, is really not theirs at all. We’ve seen this movie before (notably in Argentina in 2001/2002) and it’s not pretty,” wrote Piper67 in a Reddit post. “The ‘Greek Effect’ on Bitcoin will not come from Greece. It will come from the rest of the Eurozone. If you’re in Spain, Italy, Portugal or even France, today, you have to be thinking ‘What if we’re next?'”
And you can’t help but agree with the chorus of folks saying it’s too late for Greece to adopt bitcoin. However, the reasons they have not adopted bitcoin are not tied to some great conspiracy of banks or any real fear of digital currency. Banks, above all, abhor discomfort. They can be attacked on all sides by regulators and skate by but until the first domino falls and the first bank accepts deposits in bitcoin (however that would work) the discomfort associated with the new is a deal breaker. Until banks stops closing accounts because of legal bitcoin sales there is no hope for the savvy saver to drop a certain portion of their earnings into BTC.
That is not to say bitcoin is standing still. There is some evidence that euro transfers are up (but the information comes from the exchanges themselves and there is no independent way to audit their claims) and I would tend to believe that Greeks with cash in hand would be more inclined to hide it than feed it into a bitcoin ATM. It’s up to bitcoin and the bitcoin economy to push through that veil of distrust and discomfort and make the platform as easy to use as the cellphone. Until then, all talk of bitcoin ATMs in public places and traders on the ground with wads of cash and QR codes is moot. This will all change. Once ecommerce was considered an untrusted rarity around the world. Today we 1-Click on Amazon for toilet paper. The same one-click trust must exist before a bitcoin miracle occurs, no matter how hard we wish it weren’t so.
“What should my grandmother in Greece do with her savings right now? My younger cousin? She should hide them under the mattress, or invest them in a Unicorn,” said Jackson. In these turbulent times, most would tend to agree.