What the Greek debt crisis taught us about Bitcoin, 10 years on

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Adoption does not follow a straight line.

At least, not at the local level. But definitely, if you amalgamate the world’s adoption rate for mobile phone subscriptions and the internet, the line will indeed go straight up. 

Zoom into individual countries, though, and you’ll soon see that the road to widespread usage can be rocky — but the result is still the same.

Greece in July 2015 was in the midst of an all-out banking crisis.

The European Central Bank had declined to further prop up Greek banks with emergency debt. By this point, Greece was only just scraping together repayments for a 1.6 billion euro ($1.9 billion) loan from the IMF which had fallen into arrears at the end of June.

Greece’s government scrambled to secure alternative financing but failed. Having judged the terms of the ECB’s deal as politically toxic, the then-prime minister instead called a snap referendum over whether to accept.

Initial deal terms ranged from indefinite austerity to further cuts to pensions to forced pre-approval of domestic laws to the placing of 50 billion euro ($58.5 billion) in national assets into a fund supervised by EU representatives.

Greeks rushed to ATMs to withdraw cash as soon as the referendum was called, resulting in an emergency bank holiday and capital controls. Withdrawals were restricted to just 60 euros ($70) per day, international transfers were mostly barred and the local stock exchange was closed.

Three days later, Greece became the first developed country to ever default on an IMF loan obligation. This effectively isolated Greece financially until votes were counted.

Citizens voted against the deal (61.3%), plunging the Eurozone into another two weeks of deliberations, which almost resulted in Greece leaving the eurozone altogether, as shown above. The government eventually approved austerity measures later in July. The situation would continue to play out for the rest of the year.

When we talk of Bitcoin’s true value proposition — the one underneath the price talk and financial tinkering — it’s hard to find one better than this precise example: Banks and the stock market have effectively locked you out of your value, and even when they can access it, you can only ever get less than $100 cash at a time.

Bitcoin obviously fixes this. If Satoshi had launched Bitcoin in 2015 instead of 2009, perhaps they would’ve buried a headline about the Greek debt crisis in the genesis block instead of one about the UK.

And certainly, people in Greece did turn to Bitcoin. One exchange reported thousands of new users and locals shared tips on how to buy bitcoin on Reddit and the Greek-language version of Bitcointalk. 

Their efforts were frustratingly hamstrung by capital controls — banks blocked most transfers, including potential deposits to crypto exchanges for buying bitcoin.

“If Greeks already have cash in hand, bitcoin is unnecessary. If they don’t, then bitcoin is unattainable. It’s a bank liquidity crisis,” Andreas Antonopoulos tweeted as local banks were closing.

Still, the price of bitcoin did rise somewhat during the ordeal, but it would only really start to take off toward the end of the year, when the worst of it was over.

The Greek debt crisis showed the world what happens when the fiat system fails a population. But when push comes to shove, it’s clear that Bitcoin as a safety net works best when you’ve planned ahead.

After all, it’s tough to build a doomsday bunker on the day after doomsday.

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