Bitcoin aficionados have long wanted to prove the virtual currency is a good replacement for old-school cash. What better time to press the issue than now, when world governments including Greece and Argentina have struggled to keep their financial systems from collapsing? Greece is the site of the latest Bitcoin gold rush.
If you can fairly compare a digital currency to shiny rocks pulled from the earth, that is. The joint company, called Cubits. The country now has four of the ATMs, three of which were set up last month.
The purpose of the ATMs: Bitcoin, a six-year-old digital currency known for its volatility, is not tied to any government or central bank.
Because it is unregulated, monetary authorities have no control over its use. People can transfer it, even across borders, with the touch of a smartphone. But it won't be easy to get traction, at least at first. Bitcoin adoption in Greece — a society that operates largely in cash and avoids even credit cards— is low, with fewer than 10, users, according to BTCGreece founder Thanos Marinos, the managing director of Cubits.
Less than half are regular users. But interest in bitcoin has shot up all across the eurozone in recent months. Earlier this summer, Irish startup Spartan Route also began using bitcoin to facilitate both imports and exports for Greek firms. For Greek companies exporting goods abroad, Spartan Route invoices the foreign firm in euros, then delivers the funds to the Greek company in bitcoin.
The Bitcoin window comes just when Greece is still sick of thinking about where to get cash. Following a three-week bank holiday in July, Greece has gradually loosened restrictions on ATM withdrawals, foreign bank transfers and payments abroad. Greek citizens were previously restricted to withdrawing 60 euros per day; now they can take out euros per week at once.
Until last month, companies were unable to send even tiny amounts of money abroad to pay for services like web and domain hosting. Greece has now eased some restrictions. Now entrepreneurs have their eyes set on weaker economies.
Greece's capital controls, implemented on June 29 to prevent a banking system collapse, have wreaked havoc on an already troubled economy. Limits on foreign bank transfers have made it difficult or impossible for businesses that rely on imports to pay their suppliers abroad. For now, the Bitcoin ATMs are perfectly legal: Greece does not consider bitcoin a currency or commodity.
Cubits, which is based in London, sees 1, signups per week for its virtual bitcoin wallets, according to its website. Left-wing Syriza party leader Alexis Tsipras, left, and leader of the right-wing Independent Greeks party Panos Kammenos raise their hands as they greet supporters in Athens, Sunday, Sept. Cubits' new affiliate in Greece, Cubits. To use it, a Greek merchant uploads their invoice to Cubits. Greek merchants do not necessarily need to buy bitcoin in order to use the service, nor do foreign companies need to accept bitcoin to receive the payment.
The company collects a small fee per transaction. As of this week, Greek citizens can send up to euros out of the country each month. The eased rules also make it easier for businesses to transfer money abroad. But most business transactions still require permission from special foreign transactions committees within the Greek banks.
Each bank has a different daily transaction limit. Items deemed essential to daily life — such as medicine, food, raw materials and anything related to energy — get higher priority. Businesses trying to pay for anything else must cross their fingers and hope there's enough wiggle room in their bank's transaction limit that day.
A stock exchange employee sits under a ticker showing share prices in Athens, on Monday, Sept. That system, while restoring the economy to a minimum level of function, has created a backlog of transaction requests among companies whose payments are deemed nonessential. It has affected primarily small and mid-sized Greek companies that don't have a foreign bank account or foreign parent company to make payments for them.
Taki Maskell of MadinMedia, an Athens-based interactive marketing agency, said it's been difficult to pay for everything from the company's web host to foreign suppliers of the audiovisual equipment he needs for clients' advertising campaigns. Complicating matters further, since June his domestic suppliers have been demanding payment up front — in cash — rather than extending lines of credit because they want liquidity themselves.
That led MadinMedia to look for payment alternatives. They participated in early demonstrations of Cubits. Getting paid for exports in bitcoin helps companies avoid the strict financial laws in place because the digital currency is not subject to government restrictions, said Spartan Route's chief operations officer Danny O'Donovan.
But so far it's been a hard sell to Greek merchants unfamiliar with the digital currency. BitPagos, the biggest bitcoin company in Argentina, is also looking to set up shop in Greece. The two-year-old startup allows merchants — primarily from the hotel and tourism industries — to bill their customers in bitcoin or dollars, bypassing the country's own capital controls and troubled Argentinian peso.
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