In a tweet on June 20, the 41-year-old Internet entrepreneur Kim Dotcom advised his followers to invest in either Bitcoin or gold, claiming that values will rise once Greece prompts the global market to crash again.
Dotcom is not stranger to controversy. He is best known for his now closed file storage and viewing service Megaupload. Formerly known as Kim Schmitz, he recently won a court decision preventing the U.S. government from seizing his property.
Dotcom has been advocating on social media for the use of digital currency for quite some time now. As with most of his tweets, this one garnered a mixed bag of responses, ranging from followers praising his courage, to others calling bitcoin an “NSA pyramid scheme.”
His tweet was later followed by another, further taunting Greece about its default.
Markets are a fragile fantasy fueled by printed money that isn't linked to real value. Greece is a loaded reality shotgun. Pull the trigger?— Kim Dotcom (@KimDotcom) June 20, 2015
Gold vs. Fiat: Crash Course
When it comes to market crashes, history shows that investing in precious metals is not as wise as Dotcom thinks. In fact, during the 2008 market crash, gold prices “fell by about 25%,” according to Seeking Alpha, a stock market analysis website.
Also, while Bitcoin may have risen in price during the Cyprus crisis, there is no proof that the financial uncertainty in Greece has the potential to start yet another Bitcoin bubble.
While Dotcom’s MEGA service is the only one available online that provides end-to-end encrypted video chat, as well as 50 GB of free storage, skeptics on Reddit claim this is yet another attempt by Dotcom to “pump and dump” the price of gold and Bitcoin, citing the Letsbuyit.com controversy back in 2001, which lead to a criminal investigation against Dotcom.
Back then, Dotcom bought €375,000 worth of shares in Letsbuyit.com. He then announced that he was going to invest in a further €50 million, driving up the price of the nearly bankrupt company’s shares overnight. He subsequently sold his shares, earning a profit of €1.5 million.
Greece and the Great Euro Depression
It’s been a troubling five years for Greece, as the country has been steadily stumbling from crisis to crises since the Wall Street market crash in 2008. With a current unemployment rate of 25%, Greece’s bailouts by the International Monetary Fund — over €250 billion in value to date — have paid a portion of Greece’s international loans.
Many Greeks, however, argue that the harsh austerity imposed with the bailouts prevent Greece from standing on its own feet. Greek Prime Minister Alexis Tsipras himself has argued that the bailouts created a “humanitarian crisis” in Greece. The proposed austerity measures have caused tax prices to skyrocket, and have affected the elderly and newly retired the most.
The International Monetary Fund has given the country one final chance to secure €7.2 billion by 30 June, an unlikely sum that may force Greece into default.