So, as it turns out, people are trying to get all of their money out of the banks in Greece. We suspected this might happen.
Everyone in the Bitcoin community is saying these people should convert to Bitcoin. Is that an option at this point? How can they get it if all they have is a currency that people increasingly do not want? There is a certain lack of fungibility in the Euro system; where it is obvious that a Euro was made for a certain country. This does not make it unusable in other countries, but if the whole country were to exit the Euro, then the Greek Euros might quickly become worthless anywhere. Thus, would people want to accept these particular Euros in exchange for Bitcoin they can’t get back? Seems a risky proposition.
So when people suggest that the Greeks should switch to Bitcoin, they have to consider the methods that the Greeks could use at this point. Most of them would involve using their banks, which seem to become just about functionally useless soon. People have been withdrawing their funds at an alarming rate in recent times, perhaps with the goal of getting their money into their hands. While this might be a good idea in the short term, as said earlier, if the Greek Euros were to be broken from the Euro system, then they would lose their value quickly. A new currency would have to be developed.
At present, they would get the same buying power as any other Euros on an exchange. But a bank would have to be used to transfer the funds and do the trading, and that would require the bank to process such a transaction.
Bitcoin’s Portability is Superior
This is not to say that Bitcoin couldn’t be great for some Greeks, trying to get their money into a safer position. After all, no matter the new currency, they’ll be able to trade their Bitcoin back out into it. In the meantime, their Bitcoin would retain value internationally, no matter what happened in the country. This would, in effect, be the ultimate advantage. The portability of Bitcoin would give it an edge over any other currency. A fortune could be stored on a portable hard drive or a USB drive even if necessary. This could be encrypted, and moved with the person wherever they went.
This is unlike any other asset, like cash or gold. Such assets wouldn’t ever be able to take up so little space. The more cash or gold you have, the more space you need for them. But with Bitcoin, a single hard drive and maybe a back up drive for it are all the space you need to store it. Thus it makes sense that some would suggest Bitcoin for some groups in Greece, but for many people, it just won’t be possible at this point, since the only currency they might try to buy with might lose all value soon.
Images from Shutterstock.