The day-to-day drama over Greece’s currency options — to exit the Eurozone or adopt an alternative currency — seems to be a factor in the rising value of bitcoin in recent days.
The mother of all cryptocurrencies surpassed $300 Sunday, the first time it has crossed that benchmark in months, according to CoinDesk‘s index that tracks bitcoin’s value over the four major exchanges.
The demand for cash in Greece may be fueling interest among Europeans in alternative currencies, such as bitcoin. This month, there has been at least a 35 percent increase in bitcoin activity in Greece compared to average weeks for the company Coinbase, which allows people to buy and store bitcoins, the digital currency introduced in 2009.
San Francisco-based, Coinbase operates with banks in 24 countries with a 1 percent fee for exchanging bitcoins into the local currency. Coinbase, which facilitates conversions and exchanges for individuals and businesses, is one of the best-financed bitcoin startups.
The company recently lowered fees to zero when buying bitcoins with euros, an offer which ended July 5. Sending and receiving bitcoins is a free service.
“We feel that all Europeans should educate themselves on the benefit of using a global currency that is not controlled by any particular country or company,” Coinbase stated in a blog post, referring specifically to the move by Greek banks to limit customers to withdrawing 60 Euros per day.
Garrick Hileman, an economic historian at the London School of Economics, told CNBC it’s “very unlikely” that the Greek government would formally adopt bitcoin as an official currency due to many factors including security, such as who actually gets bitcoin custody, for example. But he added that the digital currency’s use may increase significantly in the event of a Grexit, the term for Greece exiting the Eurozone.
“Greeks may understandably lack confidence in a new drachma (local, official currency) and seek an alternative,” he said.
Bitcoin’s appeal for Greeks, or for citizens of any nation where the national banking system is failing, is that the digital currency is decentralized, or not tied to any government. Its transactions are, for the most part, securely tracked on bitcoin’s blockchain (a public ledger of sorts), and bitcoin can be transmitted anywhere with little or no fees.
It’s not that the people in Greece are buying bitcoins, Tweeted David Irvine, who works for digital security company Maidsafe, because it “wont help [Greeks] at the moment… Hands on spendable cash is issue, need to buy food etc.”
But Ehrsam further explains that Europeans overall may be pushing up bitcoin’s value as a response to the notion that similar banking restrictions could unravel the finances of consumers in other Eurozone nations.
“More practically speaking, Greece is not particularly forward or technologically savvy,” he says. “It more goes to periphery countries in Europe. I think people are waking up a little bit.”