It might be too late for bitcoin to save Greece from its currency crisis, but the digital currency is evolving fast enough that there’s a good chance it will help future crises. Christopher Mims, a writer for The Wall Street Journal, claims in today’s edition that digital currency is “at an inflection point” and evolving faster than most people realize.
“Whatever happens to bitcoin itself, the technology underlying it opens up previously unimagined possibilities for the future of just about anything humans exchange,” Mims stated.
For Greeks to get ahold of bitcoin, they need to buy euros, which is the last thing they want to give up under the current circumstances. There is a daily limit on the number of euros that Greeks can withdraw from banks. The unwillingness to part with euros is why bitcoin today has no bearing on Greece’s situation, Mims noted.
However, blockchain technology opens up “unimaginable possibilities” for anything that people exchange. To prove his point, Mims cites a continuous interest in bitcoin from large financial institutions such as UBS, the Bank of England, Deloitte, and Nasdaq. He also noted that Greece’s former finance minister, Yanis Varoufakis, claimed the country could use bitcoin technology to create a coin. The coin’s value would be guaranteed by future tax revenue.
Michael Casey, a senior adviser to the MIT Media Lab on cryptocurrencies, said the blockchain could issue the scrip that Greek companies are presently using to pay suppliers and employees, the article noted. This scrip, which promises to pay back debt as soon as banks unlock a company’s money, is an alternative currency that Greeks are using during the current crisis. The mechanism to issue scrip, according to Casey, would be a new technology called “sidechains.” Sidechains are a way to modify bitcoin to allow its use for any transaction, including representing a national currency.
Greece could create a “collateralized currency” backed by state-owned assets, according to Casey. Cryptocurrencies could represent these assets.
The blockchain has the potential to democratize the creation of money, Mims noted. “And that, for many observers, is fundamentally what the debate over Greece and the fate of the entire European Union is about,” he stated.
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