Greek Capital Controls: Catalyst for Bitcoin Frenzy?

Capital controls have been imposed on depositors in Greek banks, who can only withdraw 60 Euros a day and are unable to make payments abroad, for an indefinite period of time. Uncertainty about Greece’s relationship with the Euro and a series of unsuccessful debt renegotiation talks have seen investors questioning what a ‘Grexit’ would mean not just for the Euro, but also for the entire financial system.

When capital controls were imposed in Cyrprus in 2013 preventing payments abroad, depositors rushed to Bitcoin, which saw its price in dollar terms rise tenfold during the banking collapse that year. Since the start of June, Bitcoin has risen by 17.5% to $262.73 – the highest in 3 months – while other cryptocurrencies have also experienced significant gains. It would appear that the desperate situation in Greece is causing a growing number of Greek residents to experiment with Bitcoin and other cryptocurrencies. Could Greek capital controls be a catalyst for mainstream adoption of Bitcoin?

Bitcoin’s growing relevance

Dubbed as a future world currency by some and derided as a meaningless string of digits by others, Bitcoin has undoubtedly emerged as a dominant force in the digital cryptocurrency space. Created by an unknown computer programmer referred to as Satoshi Nakamoto in 2009, Bitcoin was created as a means of removing the middlemen from financial transactions – preventing a controlling entity (such as a central bank) from debasing or seizing the currency. This de-centralised system is maintained by a large peer-to-peer network of computers which use its processing power to process transactions in exchange for fractions of Bitcoins as payment.

Excited by its potential as a payment system and currency, investment in Bitcoin start-ups has gathered momentum since attracting the attention of the financial press in late 2013, rising from a paltry $30m invested before 2014 to $400m

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