In prior posts we’ve observed that the technology underlying Bitcoin – the “blockchain” – presents a world of possible applications unrelated to the use of Bitcoin as a currency. From securities settlement to remittances to asset transfer to the Internet of Things, the possibilities are endless, and some of the best and brightest minds in the world are investing their time, energy, and money to unlock the blockchain’s potential.
But the crisis in Greece is shining a brighter light on Bitcoin as a currency. With capital controls, restrictions on withdrawals, and widespread fears of a banking collapse, there has reportedly been a significant increase in the acquisition of bitcoins by users in Greece. With Greeks reportedly resorting to IOUs to obtain needed goods because of a lack of access to their money, the crisis underscores the advantages of Bitcoin as a way of paying for goods and services and transferring money across town or around the world without having to depend on traditional financial institutions.
The crisis in Greece is too far advanced for Bitcoin to have a significant impact – there aren’t many places to spend bitcoins in Greece and, after all, it’s hard for Greeks to get access to their money in the first place. But reports of an increase in Bitcoin trades in certain other southern European countries has led to speculation that people in those nations are acquiring bitcoins as a hedge against future banking instability and government restrictions should their countries follow in Greece’s unfortunate footsteps.
Some have minimized the potential future impact of Bitcoin as a currency by pointing to its volatility as compared to fiat currencies. But when you can’t access your own money from your own bank account, it may be time to rethink which currency is “virtual” and which is “real.”