Real Life Economic Disaster in Greece Causes Dangerous Run on Virtual Currency No One Actually Uses

In yet another example of virtual reality infecting the real world, the economic collapse of Greece is inspiring many Greeks to withdraw their savings to buy Bitcoin virtual currency:

Ten times as many Greeks are registering to trade bitcoins on the German marketplace Bitcoin.de than usual, according to CEO Oliver Flaskaemper. Bitcoin trades from Greece have shot up 79% from their ten-week average on Bitstamp, the world's third-largest exchange. Even trading platforms in China are getting interest. LakeBTC, headquartered in Shanghai, is seeing a 40% increase in visitors using computers in Greece.

I rarely offer actual economic advice to anyone, but in this case, I feel qualified to say this, and say it with emphasis: Greeks, please, please, please put some serious thought into whether you really want to risk your life savings on a virtual currency hardly anyone actually uses.

I mean, seriously:

There aren't many ways to spend [Bitcoin] in Greece anyway. According to one publicly maintained registry, BitcoinMaps, there are only half a dozen spots in Athens that accept Bitcoin as payment. Among them: a family restaurant called Angel Tavern, a head-and-neck surgeon, and a yacht rental company.

And that's not just true in Greece -- it's true in the heart of Bitcoin hype:

"How many people actually buy stuff with Bitcoin?" I asked him, while munching on a chocolate sample.

"Not too many -- maybe 2-3 every month," he told me. However, he added, it was even less before December last year, but Bitcoin purchases "took off during the holidays". To, you know, 2-3 purchases a month. On the one hand, given my ongoing skepticism, I expected roughly zero purchases. On the other, the San Francisco Ferry Building is one of the most popular shopping destinations in the entire city; in 2003, it drew 6 million visitors.

And as I pointed out earlier this month, Bitcoin usage is still flat. Despite that, hundreds perhaps thousands of Greeks are risking their hard-earned money gambling on Silicon Valley's utopian promises of a Bitcoin future. I don't know enough about their options to suggest a better one, but I can say with absolute confidence that Bitcoin is not their best alternative -- and probably not even their least worst one.

Please share this post:

Tweet

 

Comments

[Orca Flotta]

There are not many options left for the average Greek to get his money. The clever and fast reacting guys stormed the ATMs during last week or so and took all their money in cash. Then the ATMs were running out of cash reserves and many banks closed. Uh, you know they have a little cashflow problem in Greece, do you?

So what to do now? Wait until the gov'ment decides for you and in your best interest to freeze all accounts until further notice - in other words you can kiss your money byebye - or trying the next-best thing to pull your money out of the system, and save as much as possible? For example Bitcoin springs to mind.

[megabucks]

I agree - people should think very hard before trusting their life savings to a new technology. However the current situation is not a run on Bitcoin, it's a run on Greek banks.

I thought I would share a link to an article published today, written by Andreas M. Antonopoulos, who is an expert on Bitcoin and a Greek national himself. He raises important questions about freedom and the future of money, quite relevant to the bank run in Greece. The article has generated a lot of reader feedback on Reddit and direct comments to the article. Link to Reddit discussion here: http://www.reddit.com/r/Bitcoin/comments/3bqzof/money_will_be_digital_but_will_it_be_free_fee/

I enjoy NWN's frequent coverage of Bitcoin but wish you had a better understanding so you could provide more rounded commentary. I can't help but think you've missed the point when you rate the viability of Bitcoin by how much chocolate people buy with it at a corner store (as you pointed out last month). The future of money is going to be digital one way or another, so people should educate themselves properly about it.

By the way, Bitcoin is a "Digital" currency, not a "Virtual" one. As a writer about virtual worlds, you should well know the difference.

[megabucks]

Also, for anyone wanting to educate themselves or experiemnt with Bitcoin, I've been giving away a very small amount for free via an automated object in Sandbox Shiromani - as I've been personally curious about the level of crossover within Second Life.

Currently the giveaway is 0.005 BTC per avatar born before 2015 (or about $1.30 at today's exchange rate). Look for the Bitcoin sign at http://maps.secondlife.com/secondlife/Shiromani/10/140/55 :)

[Wagner James Au]

I just looked for the Bitcoin kiosk but couldn't find it among all the ads and such!

[megabucks]

Thanks for looking! It's Just a sign against the middle of the north wall of the sandbox, amid the regular advertising.

Here's a picture of what it looks like: http://i.imgur.com/ou805F8.jpg

Admittedly, it could be hard to spot in among the plethora of advertising boards. It was about the most prominent position I could afford, considering it's a free giveaway :)

The slurl leads directly there, but the sandbox has a landing point. After arriving in the sandbox, you can teleport a second time to go directly there: http://maps.secondlife.com/secondlife/Shiromani/10/140/55