Friday 23 February 2018

Greek tragedy gives fresh life to Bitcoin, virtual currencies

People stand in a queue as they wait to use the ATM of a bank in the Greek capital, Athens, amid the continuing uncertainty over Greece's place in the Eurozone
People stand in a queue as they wait to use the ATM of a bank in the Greek capital, Athens, amid the continuing uncertainty over Greece's place in the Eurozone

At a coffee shop on a beach in Athens sits Thanos Marinos. The forty-something Greek prides himself on being the first to bring Bitcoin, a digital currency, to his cash-strapped country a year ago.

"I didn't see it as much as a business case back then," says Marinos. "The main reason was to bring awareness about Bitcoin and blockchain technology to Greece."

Demand has never been stronger, he says, up by 500pc in four weeks.

When starting from zero though, even 500pc doesn't go far. Greece is a country of more than 10 million and an average age of 43.5. A quick and un-scientific survey of 10 people on the street showed just two people had heard of Bitcoin.

That hasn't deterred others from joining in. A bookshop in a north-western suburb of Athens is home to the country's only Bitcoin ATM. One man is stocking up. His name is Felix Weis, a computer programmer who's taken a year off to travel the world with one caveat: he can only use Bitcoin, and cash as a last resort.

"I have to," Felix says, because "I cut up my credit card. In Greece I'm offering people 30pc extra to try and convince them to start accepting Bitcoins because I really believe in it." Felix is 27 and from Luxembourg. He dropped out of a Computer Science and Economics programme in Germany after just one year. "I've been programming since I was young. I wasn't really learning anything new. From the economics side I didn't think the fundamentals were right," he says. "But not for everything."

He has an opinion about what should happen in Greece too. "It's hard to compete in the Eurozone. After all you look at Romania. Compared to what you see in Athens they're doing better, even though the minimum wage is lower."

All this is explained in a taxi ride to one of the only establishments in Greece accepting Bitcoin, a family-owned Greek restaurant. After insisting on splitting the fare, there's no alternative but to open an account and accept the €3.43.

The restaurant is closed but it's not a problem for Felix. The Bitcoin community is small and he knows Nikos Houtas, the owner's son, who breaks out the ouzo and salad. It's all paid for without a coin or card in sight. Four or five customers in the past two years have paid using Bitcoin, according to Houtas.

If it's going to be a viable alternative many more are going to have to cash in soon.

But last weekend, Bitcoin's software provided a well-timed reminder of why it's not the perfect financial system, either. Bitcoin transactions have been taking five times longer than usual to complete, according to Gil Luria, an analyst at Wedbush Securities. That's because the system for authorising and approving transactions within the Bitcoin network has been functioning incorrectly.

So anyone who sells a computer, say, on Craigslist for Bitcoin may want to wait five hours to confirm that the payment actually went through, Luria says.

The problems stem from a new version of the Bitcoin software that runs on PCs and servers underpinning the currency's decentralised system.

Operators who haven't upgraded their machines to the latest software have put the whole system out of whack, and it's also preventing some people from generating new Bitcoin as part of a process called mining.

While Luria says the software issue will likely be fixed in the next couple of days, this isn't the first time it's happened. Similar problems have cropped up several times in recent years. "But I don't know that it's happened to this extent, because Bitcoin has never been this big," Luria says.

Part of that may be due to the increased popularity of Bitcoin. Nearly 120,000 Bitcoin transactions took place on a single day in early June, up 10 times from June 2011, according to CoinDesk, a Bitcoin researcher and news site. When creating a system with no single overseer, these sorts of stumbles come with the territory. When a company decides to upgrade to, say, Windows 8, it can deploy the software to every computer on its network at the same time.

With Bitcoin, however, it's up to each operator to install a new version on his or her own. "This is a test of a decentralised network," Luria says. "Every time Bitcoin passes one of these tests, it gets stronger." But if the issue isn't fixed within a week, Bitcoin will have a big problem on its hands, he adds.

In the future, Bitcoin software upgrades could go more smoothly if companies continue to take market share of Bitcoin machines from hobbyists.

Businesses tend to stay on top of updates. KnCMiner, which sells Bitcoin mining equipment and operates a massive server farm for Bitcoin in Sweden, upgraded its software two months ago, says Nanok Bie, a marketing director at the company.

In the past year or so, mining for Bitcoin has become lucrative for only the largest operators. BTC Guild, a collective of such participating computers, shut down on June 30 because it couldn't turn a profit.

The trend is expected to continue. But for a while longer, Bitcoin may not be the saviour for economies in crisis.


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