As Greece approaches the referendum on Sunday July 5, there is complete uncertainty as to whether “yes” or “no’ will be voted for and what the ramifications of such a vote will mean. Meanwhile, PayPal, Western Union and Paysafe have all shut down as a result of capital controls.
Greece has already become the first developed country to default on an IMF loan to the tune of €1.5 billion. In recent days, there has been back and forth between the EU and Tsipiras, and many heated discussions leaving many to guess the next steps. There is even a splintering within Syriza to top it all off.
The latest poll commissioned by Bloomberg News shows that Greeks are in dead heat on the referendum vote with 43% intending to vote “no” to reject the austerity demanded by creditors in exchange for financial aid while 42.5% back a “yes” to accept the conditions. The survey was comprised of 1,042 people with a 3% margin of error.
This leaves much uncertainty as to the next steps and what currency would be used as a result following a Grexit. It has been reported that Greek Banks are down to their last 500 million Euros and the maximum withdrawal is down from €60 to €50 as banks have reportedly run out of €20 notes.
‘We have no printing presses’
Meanwhile, Greece’s Finance Minister Yanis Varoufakis has stated that Greece has no ability to print drachmas if that becomes necessary. There are no printing presses left in the country to physically make the drachmas.
Before Greece joined the Euro zone, "one of the things we had to do was get rid of all our printing presses" as part of the bloc's assertion that "this monetary union is irreversible," Varoufakis told Australian public radio network ABC, adding:
"We smashed the printing presses -- we have no printing presses."
Bitcoin demand jumps 400%
As this situation is rapidly deteriorating, it is becoming abundantly clear that no preparations have been made for such a scenario. It is interesting to imagine what a Grexit would mean from a digital currency perspective particularly if the drachma cannot be printed, at least for a little while.
“A lot of people are trying to invest in physical gold and at other options in order to manage risk and diversify their assets,” said the founder of Greece’s only bitcoin exchange BTCGreece, Thanos Marinos.
Marinos also added that the situation on the ground “is very tense and that people are worried,” as supermarket sales have increased by 25% over the last week with the threat of a currency crisis becoming more real. Commenting on the increase in Bitcoin popularity amidst the crisis, Marinos told Cointelegraph:
“There is a big movement from the Bitcoin community to help the Greek people and economy and there are some interesting projects in the pipeline. Blockchain technology can resolve so many issues in Greece and actually help on the negotiations with the creditors. If the Greek government wants to fight corruption then the Blockchain is the answer.”
Bitcoin demand in Greece has risen by 400% on the exchange according to Marinos. “We have seen massive interest from people, contacting us not only to register and deposit but to find out more about bitcoin and BTCGreece,” he continued. “Our registered customers are increasing and the volumes are getting bigger. Now its time to put the merchants in play in Greece and we are planning to launch something soon.”
Paypal, Western Union not available to Greeks
To make matters even worse, Paypal accounts can no longer be used in Greece.
PayPal has stated:
“Due to the recent decisions of the Greek authorities on capital controls, funding of PayPal wallet from Greek bank accounts, as well as cross-border transactions, funded by any cards or bank accounts are currently not available. We aim to continue serving our valued customers in Greece in full, as we have for over a decade.”
This shows how complicated this situation is getting as banks close and a potential switching of currencies could be a possibility in a world where technology and money transfer is heavily reliant on traditional banking.
According to Marinos, this is not just a PayPal problem, “Paysafe card, Western Union none of them are operational,” he confirmed.
Economically, Greece is slowly being cut off from the rest of the world. Since there was no contingency plan put in place for leaving the Euro zone, Greece will have some interesting choices to make if they leave the union.
While it’s still too early to tell, bank closure and capital controls are already having a major impact on the people as all the financial technology they use is tied to traditional banking, thereby putting a halt on most everyday activities.
Like it or not, traditional banking services are heavily embedded in the fabric of our everyday lives.