UPDATE: Greek Island Trials Digital Currency Solution to Boost Economy
Drachmae Connect, a tourism business network, is using NXT technology in attempt to help ease liquidity problems and business-to-business trade in the Island of Agistri.
Drachmae Connect, a tourism business network, is using NXT technology in attempt to help ease liquidity problems and business-to-business trade in the Island of Agistri. Support from the mayor of Agistri has enabled a partnership between the social network, Nautiliuscoin, Drachmae.money payment gateway, Coinstructors and SuperNET, as they begin testing in Greece.
A Tourism Landing Pad
John McLeod, a press contact with Drachmae Connect, described the company as a “business-to-business platform that will not only allow merchants to exchange services, but also enable tourists to book vacations at a discount using their mobile phone.” He said Coinstructors is managing the project. He continued:
“This solution draws inspiration from the highly successful WIR Bank that manages and issues the private currency WIR franc in Switzerland. The WIR Bank was established by two Swiss businessmen in 1934 in response to a failing economy and currency shortages.”
According to Drachmae Connect, “Discounts of up to 90% can be obtained depending on the owner’s discretion.”
The initiative aims to attract tourists with major discount tokens that can be purchased at their website. The opportunity of a decentralized equity and crowdfunding platform to the local Greek businesses is also on the table, similar to the WIR franc baking system. Part of the idea is to use NXT-generated assets as digital coupons and business-independent “air miles” of a sort, facilitate business from tourists among other obvious benefits, like easy, decentralized fintech security.
The mayor of Agistri, a small island close to Piraeus, the biggest port in Greece, is allowing local businesses to test blockchain technologies for possible adoption as currency systems. Many of the business are located in the tourism sector, and the FinTech companies initiatives like Nautiluscoin and NXT enhanced tourism network Drachmae Connect, are taking the lead.
With the financial chaos that has ensued in the country during the past few weeks, Greeks are desperate to find a new store of value. Draconian capital controls have capped cash withdraws from Greek banks to €60 per day, in order to slow the run on banks.
Neither online transfers, nor debit and credit payments, have been capped within the country, but few businesses have the POS equipment to accept plastic. The ones that do have lost confidence in the value of the local currency and thus, scarcely accept it. Nearly every penny people have is going into buying stuff out of fear of losing their purchasing power.
Shopping may work as a store of value, assuming you buy something with long-term utility, but it will seriously weaken the fungibility and convertibility of value in the hurting Greek economy. If you have a clarinet that you bought with your weak fiat, and want to buy groceries, you'll need to find a grocery store that will accept clarinets as currency.
Many Digital Options
As reported earlier this week, Nautiluscoin aims to solve this problem. Though, given how most people have no real understanding of what a blockchain is, founder Brian Kelly is offering to back the coins with a gold fund. Kelly writes for CNBC:
“Using gold to back Nautiluscoin should give both tourists and merchants assurance that a digital currency is more than just lines of computer code, while utilizing the stability fund to create a countercyclical monetary policy will provide flexibility that gold lacks.”
Coinstructors a blockchain tech company from the UK, which has partnered with Nautiliuscoin to develop the Greek payment gateway Drachmae.money, told Cointelegraph:
“The fees generated [by Nautiliuscoin] will be used by the Nautiluscoin Stability Fund to purchase gold – in this way, as the monetary ecosystem grows the amount of gold backing Nautiluscoin will also grow. Our goal by recycling the fees is to grow the amount of gold backing Nautiluscoin.”
Those new to blockchain technology should understand that cryptocurrencies — as they are sometimes called — are often highly decentralized, unlike banks, and they tend to have a hard limit on how new coins are created and who creates them.
This means that governments have much less power to impose capital controls and they cannot hyperinflate the currency to pay off foreign bankers at your expense. You control your funds and can use them however you wish. You can use them at home, or internationally, just by converting them to Bitcoin. Cryptocurrencies are digital cash.
A Forbes article on the topic mentioned the SuperNET, which could provide entry and exit ramps from fiat currencies around the world through exchanges like Coinomat and Coinomal. They certainly are not the only cryptocurrency-to-euro exchanges. Lee Grant, founder of Coinstructors goes into more detail on their website.
The initiative could shield the island from the political and economic instability of Greece. Whether the country finds a way to stay in the euro or reverts to the drachmae, Nautiliouscoin and the NXT assets could still stand as a kind of independent currency for the island of Agistri.
The project, however, is still young and in the testing stages, though its founders believe it could be deployed within weeks.