Where does bitcoin fit in the currency crisis?

Where does bitcoin fit in the currency crisis?

At every turn, Bitcoin supporters say their anonymous cryptocurrency is the solution for countries in currency crisis. Despite its other shortcomings, bitcoin has a use in places like Argentina, but not so much in Greece.

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The world economy has been on a tumultuous ride thus far in 2015. The convergence of falling commodity prices, lackluster economic growth, and deviation in interest rate outlooks among major economies has forced countries with already stressed economies into even worse positions.

Currencies, in their role as barometers for an economy’s strength, have shown this strain in places like Argentina, Venezuela, and, more indirectly, Greece. The question bitcoin supporters should ask is: Can the digital currency help?

First, it must be noted that bitcoin, for all its fanfare, has several unattractive characteristics for a currency. Its value is volatile, making it risky to save money in it and difficult to know whether a price is reasonable. From a macroeconomic perspective, bitcoin’s steady and algorithmic growth in supply makes it impossible to react to an overheating or deteriorating economy by tightening or loosening the money supply, and is inherently deflationary.

But bitcoin does offer something that select crisis-laden currencies cannot: convertibility. For businesses and consumers in some of the world’s struggling economies, this is extremely attractive, even if it at the same time subverts governments’ own goals.

Grexit – Enter bitcoin?

Former Greek Finance Minister Yanis Varoufakis has had many interesting things to say about currencies, including the comments to The Telegraph that preceded his forced resignation. Last year, Varoufakis floated the idea that Greece could issue digital scrip, or a parallel currency, called the FT-coin (FT for “future taxes”) that could allow the country to have looser monetary policy than the rest of Europe without

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