Bitcoin Forum

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Interesting idea, but one problem is that the current market cap of bitcoin is far too low for an economy the size of Greece. In principle for this to work you'd have to be able to completely "cash out" the national currency if everyone demanded their bitcoins at the same time. So if Greece had $100 Billion in drachmas issued, for example, you'd need $100 Billion worth of bitcoin backing it. But the current BTC market cap is less than $4 Billion.

i still think bitcoin should be measured against "living cost"  to reduce the imbalance of the world labour value

I agree that people need to be properly trained in how to protect their coins and prevent being hacked. Without this, it will not make for a safe currency.

Let's say Greece declared the New Drachma, and announced they would issue 100,000,000 New Drachmas. And they promised to not print any more (except to replace those withdrawn from circulation/lost/destroyed), so the money supply would remain at 100,000,000 ND.

Let's say they promise and put it into law that 1 ND can be redeemed for 0.01 bitcoins. So in principle the entire ND supply could be converted into 1 million bitcoins. Since there are over 13 million bitcoins this could be done.

The problem lies in generating value for the ND. If Greece did nothing else, the ND would simply float with the price of BTC, and each ND would have a current value of about $2.50, with their entire money supply worth only $250 million. For a nation the size of Greece that simply wouldn't work.

They could force the issue by, for example, requiring all taxes, licences, fees, bills and so forth be paid with ND. This would force Greek citizens to use the ND currency. The free interconvertibility between the ND and BTC would then presumably force a strong rise in the price of BTC. The real question, though, is why the Greeks or anyone else would be interested in enriching those of us who happen to hold BTC?

It would make more sense for them to issue a new currency and promise, cross-my-heart, not to inflate it, with the same requirements forcing citizens to use it. And perhaps a way to do that would be to do as you suggest and tie the currency to a cryptocurrency - but a new one they design and release for the purpose, with no bagholders in position to be instantly enriched. It would be a challenge to coordinate and execute that without software bugs, exploits or mishaps in the mining community that would have to form. Not impossible, but risky without a well-conceived plan and widespread support from key constituencies and bodies of experts.

If the government varied the conversion rate, then it would need to have criteria for doing so. And politics being what it is, if you allow variation in the conversion rate then you can be guaranteed there will be pressures and temptations to vary the rate in a manner advantageous to powerful interests and constituencies. Over the long run that's no different than just having unbacked fiat currency. It would be my strong opinion that any attempt to produce a currency backed by crypto, should be at an absolute fixed rate of exchange with no legal manner by which the rate could officially be adjusted. The sole caveat to this would be if the parameters of the crypto itself (such as the coin supply, transaction fees or the like) were altered by the mining community.

It is not possible to every one in a country can train how to use Bitcoin wallets and how to protect them.

That would be great but highly unlike to happen.

The country need to determine the right conversion amount to back the currency. If you can't afford to buy gold, similarly bitcoin isn't cheap either. You can't possibly set a million bitcoin which is probably too low an amount. So theoretically if you set that amount, the size of a whole nation economy is essentially can be bought by few early adopters????

The volatility is too high to be adopted as a national currency imo.