Bitcoin in Greece

In a world filled with debt-ridden countries in danger of financial collapse, Greece has become the latest poster child for bad monetary policy and political bureaucracy. Many argued that Greece should never have entered the Eurozone in 2001, including German Chancellor Angela Merkel and the Former President of France Nicolas Sarkozy.

American political economist, Robert B. Reich, explained the extent of the situation in a recent post on The Nation. “ European Union accounting rules allowed member nations to manage their debt with so-called off-market rates in swaps, pushed by Goldman and other Wall Street banks.”

“The Maastricht Treaty required all eurozone member states to show improvement in their public finances, but Greece was heading in the wrong direction. Then Goldman Sachs came to the rescue.”
— – Robert B. Reich

The former US Secretary of Labor described Wall Streets “predatory lending,” which resulted in Greece owing Goldman Sachs 5.1 billion Euros, “ Mario Draghi, now head of the European Central Bank and a major player in the current Greek drama, was then managing director of Goldman’s international division.”

Eurozone problems have since come to a head, with the Greek government missing a vital deadline to pay its bills. This resulted in a 3-week bank closure nationwide, with capital controls restricting Greeks from withdrawing more than 50 to 60 Euros a day.

In an apparent attempt to democratize the situation, on July 5 the Greek people were asked to vote in a referendum asking the question, "Should the proposal that was submitted by the European Commission, the European Central Bank, and the International Monetary Fund at the Eurogroup of 25 June 2015, which consists of two parts that together constitute their comprehensive proposal, be accepted?”

The first document is titled ‘Reforms for the completion of the Current Programme and beyond’ and the second ‘Preliminary Debt Sustainability Analysis.’ The two documents mentioned on the ballot were produced in English, the language used in the technical talks between Greece and its creditors.

European Commission President Jean-Claude Juncker stated, “You must vote Yes, independently of the question asked.” The Greek people overwhelmingly voted no.

Since then many key government officials have been replaced, and Greece’s government is still trying to work with creditors. While the financial turmoil may have been the catalyst for the recent rise and fall of bitcoin’s price, with capital controls still firmly in place Greeks aren’t personally buying many Bitcoins.

Nevertheless, signs of Bitcoin adoption do exist. The Bitcointalk forum created a Greek-language board, in May 2013, and promptly made Andreas Antonopoulos the moderator. It isn’t even in the top 10 largest languages on the forum, but there are over 6,600 posts and it has become much more popular lately, coinciding with recent events.

Bitcoin speaker, entrepreneur, and the author of “Mastering Bitcoin,” Andreas Antonopoulos is himself a Greek citizen and has often said that “Greece is not ready for Bitcoin.”

“If Greeks already have cash in hand, bitcoin is unnecessary. If they don’t, then bitcoin is unattainable. It’s a bank liquidity crisis.”
— – Andreas Antonopoulos

As soon as there was some sign of the price picking up, well before the larger jump on the July 10, Antonopoulos attributed the gain to other Europeans learning about the frailty of their own currency while watching Greece. “Bitcoin is not rising because of any buying by Greeks, but because people realize Greece is not the end, just the beginning.”

And yet, it’s not hard to spot signs of bitcoins being talked about and used in Greece, if you’re paying attention. At the end of June there were only a couple of merchants accepting bitcoin in Athens, a bitcoin exchange and a restaurant, according to Coinmap. This week the number of vendors has jumped to 17, an 850% increase in 3 weeks.

At least two Bitcoin ATM machines have opened for business in July as well. The first was a 1-way, bitcoin for fiat, kiosk placed in a Bookstore in the suburbs of Athens, the second was a 2-way machine that was installed just days later in a startup coworking space. Both have reported encouraging results on forums, but stopped short of releasing any hard numbers on their volumes.

It’s no mystery why some Greeks would recognize the advantages to be had by embracing bitcoin. They’re currently living through capital controls imposed upon them by a faltering, centrally-planned financial system. A huge problem that isn’t possible with bitcoin, due to its’ decentralized nature.

“Greece is relevant to bitcoin because with bitcoin there can be no ‘bank holiday,’ no capital controls, withdrawal limits or bail-ins.”
— – Antonopoulos

Besides their crippling capital controls another, more permanent, reason that Greeks may open up to Bitcoin is that it can be used to hide wealth, with strong financial privacy.

Tax evasion has been described as “a national sport” in Greece. Setting aside the rationale that this sport may have something to do with Greece’s financial difficulties in the first place, in all likelihood these same Greeks would appreciate some of the properties found in Bitcoin.

While their income is trapped in banks, however, not many have the ability to embrace bitcoin for the time being. We may start to see some bitcoin volume increases with Banks having opened back up across the country, after three long weeks, although a weekly withdrawal limit on cash is still in place.

“The reason people in Greece have money in the bank is because they get paid by direct deposit on pensions and wages. They have no choice.”
— – Antonopoulos

In April, a Greek graduate student named Kostas Mouratidis at the Aristotle University of Thessaloniki produced the following 13-minute documentary about Bitcoin’s use and usefulness in Greece. It even included a candid discussion about Bitcoin with the former Finance Minister of Greece, Yanis Varoufakis.

Varoufakis resigned from the Ministry of Finance on July 6, the day after the infamous “OXI”  vote in the Greek referendum. An outspoken Keynesian economist, who describes himself as a “libertarian Marxist,” he is no stranger to Bitcoin. Varoufakis has previously butted heads with the Bitcoin community, verbally sparring with Erik Voorheez on twitter and engaging in a full debate with Andreas Antonopoulos during an Australian Radio show in April 2014.

While he seemed impressed with the technology, Varoufakis is a vocal opponent to sound money. In the video above, Varoufakis gives the impression that he has studied Bitcoin extensively, and at one point defends the currency against those who would ban it due to illicit trade.

Not long afterwards Varoufakis claims that bitcoin “will never be able to replace the currencies that are controlled by a central bank.” He calls the concept of being personally responsible for our money, and bitcoin users acting as their own banks, “a fantasy” and says that it “leads to economic crises like the one we have right now.” He goes on to talk about how the state won’t be able to use bitcoin for taxation, and it would therefore create even more problems.

In a post on his personal blog, titled “BITCOIN: A flawed currency blueprint with a potentially useful application for the Eurozone,” he then proposes a state-run cryptocurrency called “FT-Coin,” that would be used to pay Future Taxes.

In his scheme Varoufakis describes a 1,000-Euro tax certificate, on a new blockchain, that citizens can use to pay taxes, in two years times. On maturation, the certificate would have a value higher than the original price. The main goal of this coin would be to put an end to the ‘national sport’ of tax evasion, and would be purchased by every citizen in order to pay their taxes.

Now semi-retired, it is unlikely that his proposal will be considered by Greece’s new, pro-Eurozone Finance Minister. Along with the Greek people, the new minister has placed a proportion of blame for Greece’s financial crisis on Varoufakis.

For much of July Greeks have lined Athens’ Syntagma square, in front of the greek parliament building.  Seeing this as an opportunity to spread Bitcoin awareness, and inform Greeks about the digital currencies benefits, Dimos Chatzinikolaou and a group of Greek Bitcoiners organized a Meetup Group. The team went to the protest with signs and flyers in hand, talking to hundreds of Greeks about bitcoin.

"We are gathering donations for the first official representative body of Bitcoin and Blockchain in Greece."
—  – Dimos Chatzinikolaou

Founded on July 8, the Athenian Bitcoin group already has over 50 members. Having held a successful event last week, a second event is planned for July 27, featuring Andreas Antonopoulos, who will be skyping in for a presentation to the growing group.

Many bitcoiners, both inside and outside of Greece have been donating to this group already, simply by sending random donations to the QR code found in pictures of the poster online.

"We handed out 600 flyers in the rioting people outside the parliament of Greece. The flyers were saying: GREECE! It is time for plan B."
— – Chatzinikolaou

The flyers included some specific Bitcoin features that Greeks may appreciate, "The independent international currency -Works without banks, you are the bank. -It is a decentralized digital currency. No middlemen. -Not governed by any institution, not subject to any restrictions or haircuts. -Send and receive everywhere in the world, instantly and completely safely."

While it is clear that Bitcoin cannot save Greece from its’ current problems, many in the  Athenian Bitcoin group take comfort in the fact that Bitcoin will be there for them personally, if and when the local problems get worse. In the end, that may be all any of us can hope to ask of it.