After months in seclusion, the price of bitcoin once again emerged as the breakout tabloid star of this week’s news cycle.
Spurred by a sudden spike in trading activity on 16th June, the media quickly correlated the surge to Greece’s increasingly possible exit from the European Union (nicknamed the ‘Grexit’).
Though real evidence to suggest bitcoin is becoming a tool for Greek citizens amidst monetary uncertainty is scarce, the coverage nonetheless succeeded at overshadowing other developments in the industry, both positive and negative.
A ‘Grexit’ price pump
To understand Greece’s role in this week’s news cycle, one has to look back to the 2013 Cypriot financial crisis and its impact on drawing attention to the then-unknown technology.
Unsurprisingly given the media frenzy around another economic crisis, the media pounced on the chance to speculate on the effects of Greece’s precarious financial situation on the digital currency’s value.
For example, CNBC highlighted bitcoin’s decentralised nature and its potential to circumvent possible capital controls imposed by the Greek government in a piece titled “Bitcoin: Is it really ripe for a Greek rally?”
Despite providing various opinions from bitcoin and non-bitcoin advocates, writer Matt Clinch used the instance to highlight the rising interest in bitcoin as a technology rather than an asset class.
“Not everyone is convinced by bitcoin’s value, however, with venture capitalists telling CNBC that there is little worth in the digital currency beyond the technology that supports it.”
In his article, Clinch quoted Rob Moffat, principal venture capitalist at Balderton Capital, who said “the digital currency had passed the peak of expectations,” adding “people had become more skeptical towards it”.
The report comes just as bitcoin venture capital investment is inching towards $1bn.
In the Financial Post, John Shmuel also picked up on the trend, though others from Nasdaq to SiliconAngle would quickly follow.
“Grexit fears may be taking a toll on stock and bond prices this month, but it has been a boom for virtual currency bitcoin,” he said.
According to CoinDesk’s bitcoin price index, the digital currency rose to $257 earlier this week. While this increase is observable, more contentious is whether the increase represents Greek investors withdrawing their savings from banks, in fear of the effects of a possible default.
CoinDesk examined the issue in a separate report, finding little evidence of any increase in Greek visitors to major European exchanges.
Still, this didn’t stop journalist Michael Parsons from asking if bitcoin should become the new currency of Greece. Writing for The Metro, he ultimately concluded that it would be too risky a move:
“Monetary police, used responsibly, is useful to manage public finances, provided it is not abused to issue too much currency. Greece cannot itself use monetary policy whilst it is part of the eurozone and adopting bitcoin would put Greece in exactly the same position.”
Elsewhere, bitcoin seems to be enjoying increasing adoption in the seedier parts of global economies.
The digital currency allows you to buy drugs online – and other illicit activities which we’ve documented as part of this weekly series – but did you know that the digital currency – like cash before it – is also being used to fund prostitution?
Writing for Ozy, Jose Fermoso began his piece by highlighting just how versatile bitcoin is.
“Bitcoin. Is there anything it can’t be used for? Six years after its release, the digital currency has crept into the nether-regions of the global economy – the multibillion-dollar sex industry. Bitcoin is now a payment option at escort ad services like Backpage and Luxury Escorts International, while a small but growing number of independent escorts consider it a currency of choice.”
According to Fermoso, their reasons vary.
Liara Roux – her business name – said the author, has a “long-nursed interest in cryptography” which influenced her decision to accept payments in the digital currency from the onset. Another escort told Fermoso that she offered the possibility of being paid in bitcoin “as a courtesy and for its international appeal.”
“Bitcoin just makes good business sense,” said Fermoso, adding “It allows them [the escorts] to offer their clients something more widely coveted than all the fetish objects in the world: discretion. A lot more of it than cash or credit cards, anyway”.
“Bitcoin scatters information across the Web, transactions are effectively opaque, and so are the identities of the people making and receiving them. Accepting bitcoin allows escorts to broaden their client base much the way that accepting, say, MasterCard expands the client base of a bricks-and-mortar retailer.”
While well intentioned, the above explanation doesn’t capture the full picture.
Despite being pseudonymous like email addresses, bitcoin wallets broadcast transactions on a publicly available, distributed ledger, a feature that recent law enforcement investigations show can be just as beneficial.
Bitcoin at the movies
Greece and prostitution aside, the mainstream and local media went crazy this week, following the announcement that Dope would be the first film to accept bitcoin payments.
The promotion coincided with the news MovieTickets.com would broaden its bitcoin acceptance beyond the film, bringing the digital currency to all movies shown at more than 900 cinemas across the US.
It could be argued that the film producer’s decision to accept bitcoin payments is part of wider marketing strategy, but this assumption also begs the question of how the actual film portrays the digital currency and whether it will serve to either splatter or clean up its reputation.
It wasn’t long before Lauren Walker, a Newsweek writer connected bitcoin to illicit activity in the context of the movie. “It [the film] offers an explanation of how bitcoin works that actually makes sense – a big part of the storyline involves the Dark Web.”
So there we have it, to understand bitcoin you have to know that it can be used to pay for illegal goods online.
Walker was – unfortunately – not the only one to make the connection. The Washington Post also noted the way in which the cryptocurrency had been portrayed in the film.
The writer said:
“Mr. Famuyiwa weaves new technology into his film deftly, with a dealer tracking Malcolm via the Find my iPhone app, a montage of YouTube videos and Vines chronicling Malcolm’s successful rise and, of course, the prominent role of the bitcoin. Malcolm uses bitcoins as an untraceable method of payment to sell his MDMA and his comfort with technology is the key to the hopeful ending of the movie.”
In an article for We Got This Covered,
“Why go to an actual black market when you can just use bitcoins on the internet? The criminal underworld is evolving every day, and Famuyiwa, shows us how.”
Whether it’s being used to pay for prostitution or escorting services or it is the currency of choice for black market users, the digital currency seems to have been somewhat pigeon-holed by the media, who instead of offering a balanced view on its use cases, prefer to focus on the negative.
This week, at least, it seems bitcoin could do no right.