Bitcoin fans eye potential in Greek crisis

The world is watching with bated breath as the Greek people consider how to vote in the country’s upcoming referendum. A yes vote on Sunday will see Greece accept the terms of the troika’s bailout, and commit itself to further austerity; a no vote will see the country taking the first step towards exiting the Euro entirely.

But not everyone is afraid of the prospect of “Grexit”. For proponents of Bitcoin, the cryptocurrency, a shaky Mediterranean economy implementing capital controls amid the prospect of full-blown exit from the euro recalls halcyon days gone by.

In theory, when the conventional financial system is experiencing turbulence, alternative currencies such as bitcoin should have their time to shine. The decentralised nature of the currency means that it’s impossible for any central bank to impose controls on it, while the pseudonymity at its core could make it the perfect vehicle to get money into and out of the country while avoiding legal reprisals.

As a result, Tony Gallippi, the co-founder of bitcoin payment processor Bitpay, tweeted on Sunday night that he expected the price of bitcoin to rise to between $610 and $1,250 if Greece exits the Euro. The currency is currently worth $250. On Reddit’s bitcoin subforum, users are sharing tips on how to buy bitcoin in the country, and commenting on reports of bank runs in the capital: “Should’ve bought bitcoins”.

Part of the reason why the crisis is so tempting for proponents of the cryptocurrency is the echoes of a previous crisis in the Eurozone: the banking collapse in Cyprus in 2013, which saw that nation also impose capital controls to prevent massive outflows of currency from the panicking country.

That collapse came at the same time as the first major boom in the price of bitcoin, which began the year at less than $20 and peaked at ten times that by early April – before it all came crashing down.

At the time, many credited the price rise to interest in the currency sparked by the banking crisis, but Nathaniel Popper, author of the book Digital Gold: the Untold Story of Bitcoin, says that they are labouring under a misapprehension.

Speaking on the Guardian’s Tech Weekly podcast, Popper explained that the rise was more likely caused by an influx of money from Silicon Valley. In those days, “if someone buys $1m of bitcoin in one go … that will make the price rise”, he said.

For now, the price of bitcoin has steadily risen as the Greek crisis has intensified, from $240 on Wednesday to $250 over the weekend. It remains a long way off its 2014 highs of $1,000 per coin, but what happens after Sunday’s vote is anybody’s guess.