With financial unrest in Greece growing, at least one financial sector is seeing the potential for growth. Recently, as concerns regarding Greece's economy grew, bitcoin surged as much as 7 percent, largely due to Greeks scooping up the decentralized digital currency in an attempt to protect their personal assets.
While the value of bitcoin has previously demonstrated some volatility, as it fluctuates based on user demand, the cryptocurrency has stabilized over the past several months and is now increasingly accepted in mainstream circles, including by major financial institutions. That stability appears to have driven many Greeks to consider bitcoin as an alternative to the euro.
The latest financial woes in Greece are certainly not the only time that such problems have driven depositors to rely on the cryptocurrency. In the spring of 2013, the digital currency's value increased by nearly 700 percent during a one month period when Cyprus seized deposits.
Bitcoin surging amidst financial concerns in Greece
Now, as banks close in Greece, frantic citizens there have begun to place more faith in the digital currency than in the euro. Many of the largest bitcoin exchanges in the world have now reported receiving a tremendous surge in business from Greeks. Bitstamp reports that the number of Greek bitcoin trades have increased by 79 percent. Other exchanges have reported receiving a flood of emails from Greece with questions regarding the legality of using bitcoin in EU and how to use bitcoins in Greece. Some exchanges have even marketed their services directly to Greeks, offering discounts and fee-free trades.
With capital controls rising, Greeks have been forced to sit back and watch as their banks were closed, ATM withdrawals became limited, and funds were prohibited from being sent out of the country. Given that bitcoins are able to be spent in Europe legally and bitcoin wallets can be used to access funds from practically anywhere, it is little wonder that so many Greeks are expressing interest in the cryptocurrency.
As a result, there has been tremendous speculation regarding whether the crisis in Greece could drive the rate of adoption of cryptocurrencies such as bitcoin. The potential certainly does seem to be present. Furthermore, there are indications that Greek may have begun buying up the digital currency some time ago in anticipation of a financial crisis.
Too little, too late for some Greeks
Unfortunately, for those in Greece who waited until the government enacted controls to withdraw their money, it was too late to purchase bitcoin. With limits imposed on cash machines, only allowing Greeks to withdraw €60, and payments overseas restricted, many Greeks found they had no options available to them. The capital controls had such an effect on Greeks that reports indicate that the only ATM capable of dispensing bitcoin received no business once the banks there were closed. Ultimately, it was only those Greeks who had the foresight to store cash outside banks who were able to take advantage of the opportunity to buy up bitcoin.
After news of a bailout deal for Greece emerged, bitcoin almost immediately lost more than 10 percent of its value. The new financial aid package came about following more than 17 hours of talks between the Greek capitol and the country's creditors, resulting in Greece adhering to far stricter financial reforms. As financial experts have been quick to point out; however, simply because Greece has reached a settlement, that certainly does not mean that everything is resolved. The restrictions that the country must adhere to could prove to be quite painful for Greek citizens and may well cause even more people to consider the benefits offered by bitcoin.