For weeks commentators have been discussing the possibility of Greece leaving the eurozone and how a return to the drachma might be facilitated…The drachma is not Greece’s only option however….In some parts of Greece social entrepreneurship, technology, and skepticism of politicians have already given rise to alternate trading mechanisms and created an environment where a cyrpto currency by the name of “Bitcoin” could become increasingly popular. [Let me explain.] Words: 709
So says Matthew Feeney (www.reason.com) in edited excerpts from his original article*.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Feeney goes on to say, in part:
As the euro crisis worsened many Greeks began hoarding euros, and more recently there have been small runs on banks. Spending on goods has gone down and prices have been rising….Social entrepreneurship has resulted in a modest but inspiring solution to this trend called TEM, an online bartering system that allows residents to purchase groceries and other goods in exchange for services while keeping their euros to pay the rent….
The euro crisis provides an example of the kinds of situations where competitive currencies might prove useful. Modern technology has made the development of these “crypto-currencies” easier and, in many ways, more desirable as they are safe from the level of regulation suffered by government-issued money making them more flexible and convenient for purchases and sales.
Bitcoin: A Peer-to-Peer Electronic Cash System
The most prominent of these crypto-currencies is bitcoin, [an experimental new digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. Bitcoin is also the name of the open source software which enables the use of this currency. The software is a community-driven open source project, released under the MIT license.]
Bitcoin frees those who use it from political uncertainty, fiat policies, and it is less affected by international money markets than traditional currencies. Isolated from the political environment in Europe, Bitcoin offers Europeans a viable alternative to the euro and a return to traditional currencies. There have been reports of more Europeans using Bitcoin as their confidence in political solutions diminishes.
(View video “Bitcoin and the End of State-Controlled Money” here)
Both TEM and Bitcoin offer some welcome relief from the current situation in Europe. There is no government interference (yet) and transactions are free [although] that is not to say that there are not concerns over Bitcoin.
George Selgin, professor of economics at the Terry College of Business at the University of Georgia, points out that Bitcoin breaks the dichotomy of fiat vs. commodity money proposed by the pioneering Austrian economist Carl Menger. Selgin calls Bitcoin a “quasi-commodity system” and argues that it is not money. Bitcoin is not widely used for transactions, and according to Selgin the euro crisis is not serious enough for Bitcoin (or something similar) to spontaneously emerge with any degree of influence. Even in the Weimar Republic Germans resorted to using already existing currencies like the British Pound rather than creating a new currency. For Selgin the unorthodox status of Bitcoin, the lack of historical precedent, and its mono-linguistic culture makes a mainstream Bitcoin emergence in Europe unlikely.
Jerry Brito, senior researcher at the Mercatus Center, agrees that Bitcoin is not a viable rescue tool for Europeans, but he does see Bitcoin as money. According to Brito, one of the main advantages of Bitcoin is its power to overcome regulations. There is no central bank or regulator with Bitcoin, and it will exist as long as the Internet is around. It is open source and peer-to-peer. While Bitcoin might not take off en-mass in Europe, Brito notes (some German and Greek companies are already using it), there is no reason to think others will not begin to do so as well.
Greece will almost certainly leave the euro. How ordinary Greeks react will define their economic livelihood for decades to come. The use of TEM in Greece and the rising appeal of crypto-currencies are some indication of the non-political solutions some Europeans have in mind.
While crypto-currencies have not yet been widely adopted, the euro crisis provides an ideal environment for them to flourish. With governments inflicting a huge amount of damage, currencies without central control look increasingly attractive….
*http://reason.com/archives/2012/07/06/alternative-currencies-rise-eurozone-cri (To access the above article please copy the URL and paste it into your browser.)
Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.