Bitcoin rises as risk of Grexit unsettles markets

Greeks are able to access more cash through bitcoin. [Antana/Flickr]

The risk of Grexit has caused the markets to plummet, but virtual currencies are cashing in. EURACTIV France reports

The Asian markets suffered overnight between Tuesday 7 and Wednesday 8 July, following a European summit that compounded fears of a complete economic collapse in Greece. The Nikkei index dropped by almost 4% and the euro fell heavily against the dollar. Raw materials are also in decline, and the price of crude oil fell by 2% to $56.20 a barrel.

Only bitcoin, an electronic currency, is offering some form of refuge. Many Greeks have decided to convert their assets into bitcoins, especially since the arrival of bitcoin ATMs in Athens.

While the value of the virtual currency is on the rise, it is still far below its all-time high point. After peaking at $1,100 in January 2014, the exchange rate crashed to below $200 one year later. One bitcoin is currently worth $267.

The currency is increasingly attractive in Greece as it offers much-needed access to cash, while the banks continue to ration withdrawals to €60 per person per day.

>>Read: Some Greeks look at bitcoin as alternative currency

Electronic currencies have never been so popular. 120,000 bitcoin transactions were carried out in just one day in June, a ten-fold increase on four years ago. Some of the virtual currency’s exchange platforms, like Coinbase, have taken advantage of the surge to raise their transaction fees.

Grexit strategy on standby

Members of the eurozone convened in Brussels on Tuesday (7 July), and gave themselves until this weekend to agree on an emergency aid plan to avert the economic collapse of Greece and keep the country in the single currency.

But for the first time, Jean-Claude Juncker, the President of the European Commission, admitted that he was prepared for the worst. “We are ready with a detailed Grexit plan.”

The veteran politician added that he hoped it would not come to that, but that he was powerless if the Greek government refused to respond to its European partners’ demands.

French central bank fears “chaos”

Christian Noyer, the governor of the Banque de France, the French central bank, told Europe 1 on Wednesday that the ECB could not go on supporting Greece indefinitely.

>>Read: Paris puts Bitcoin on EU agenda

“With no agreement on a reform programme in Greece, the European Central Bank (ECB) will be unable to keep supporting the Greek banks,” Christian Noyer said.

“The Greek economy is on the edge of catastrophe. A deal absolutely must be found on Sunday because it will be too late after that and the consequences will be serious,” he added. “I fear that if there is no agreement by Sunday it would spell the collapse of the Greek economy and chaos in the country.” 

Bitcoin is a worldwide virtual currency. The value of the currency currently in circulation is around $7 billion. According to Bitstamp, one of the currency's main exchange platforms, one bitcoin was worth $267 on Wednesday 8 July.

Transactions in the currency, which was established in 2009, are carried out anonymously on unregulated internet platforms.

Bitcoin is facing a severe crisis today after the collapse of one of its main exchange platforms in February. Pirates broke into the Japanese MtGox platform and stole a large quantity of bitcoins.

The European Banking Authority has warned that Bitcoin lacks consumer protection. Bitcoins can be stolen and chargebacks are impossible.

Several countries, including Germany and Japan, have begun work on a regulatory framework for the currency, but discussions at a European level are still in their infancy. 

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