Bitcoin Forum

Could a digi-drachma avert a Grexit?

http://www.reuters.com/article/2015/06/05/us-digital-currency-greece-idUSKBN0OL0JR20150605

Greek Finance Minister Yanis Varoufakis may have been joking when he tweeted about Greece adopting bitcoin, but some financial technology geeks say an asset-backed digital currency could be a solution to the country's cash crisis.

In order to avoid such a "Grexit" some reckon Greece could adopt a bitcoin-like parallel digital currency with which it could pay its pensioners and public-sector workers. It could be called the "digi-drachma", after Greece's pre-euro currency.

Making money out of thin air, probably, isn't going to solve their problem, they need euros to pay their debts, not magic beans...

Plus, such currency is going to exclude a substantial percentage of the population, older people has difficulty, or cannot do it at all, to deal with new technologies.

Yea, we could say that... BUT a digital crypto currency could solve one of their other problems. {Government corruption - With crypto, it could become more transparent}

They have huge debt, and in part, it started with government corruption. If you reduce corruption with transparent tenders, you would solve the cause, not remedy the result.

I speak with friends in Greece on a weekly basis and they all say, problems with the financial situation will not be solved, by throwing more fiat money at it.

Create a more transparent system and build from there.  :(

How could it solve corruption if you only need passing your crypto currency in a mixer or two to break the link between the corruptor and the corrupt official? IMHO, a crypto currency...simplify spiriting bribe money out of the country, not eliminating corruption.

Yup, you are right. A digital currency by itself is not going to solve any problems. What you need is concrete action on the ground to tackle the debt problem.

For Garrick Hileman, an economic historian at the London School of Economics who specializes in alternative currencies, the problem with such a plan is that it does not deal with Greece's most basic problem: the need to reduce its debt burden.

Right now, nothing can prevent a Grexit. The net debt stands at around $300 billion and the total population is just 11 million (and declining). That is, an average Greek family owes around $123,000 worth of national debt to the troika. The average Greek annual salary is just about one tenth of that figure. So the writing in the wall is clear.

change the currency system in the country will not be a solution to  country's cash crisis., but the right policies are needed to improve the economy and the investigation to find out in which sector a lot draining state coffers.

Euro itself is also money out of thin air, now ECB is printing 60 billion per month without end in sight. The only difference is that the trust of Euro is higher than drachma due to euro zone is bigger (that is everyone's knowledge about fiat currency: If big country print money, it worth a lot, if small country print money, it worth a little ;D)