Greece’s New Finance Minister: Bitcoin ‘Highly Problematic Currency’

The Finance Minister of Greece’s new radical left-wing government, while at the center of anti-austerity financial policy, is in no way optimistic about Bitcoin, it has emerged.

In an article on his website blog from April 2013, Yanis Varoufakis discusses the “impossibility” of a decentralized currency being controlled “apolitically,” and describes this as a “dangerous fantasy.”

He stated:

“[T]here can be no de-politicized currency capable of ‘powering’ an advanced, industrial society.”

Varoufakis has inherited Europe’s worst-performing economy, and will seek to end the austerity measures put in place by the previous Greek government following the 2008 financial crisis. Greece’s economy has shrunk by over a quarter since that time, and in line with Prime Minister Alexis Tsipras’ aspirations, Varoufakis will be under pressure to present policies that will deliver radical change. From the tone of his previous statement, however, it would appear decentralized digital currency specifically is not viewed as an aid in this respect.

Despite describing Bitcoin as a “very special form of digital currency,” Varoufakis outlines deflation and control of the majority of coins by a minority of investors as “two insurmountable flaws that make Bitcoin a highly problematic currency.”

He further concludes that the only solution to these problems is a Bitcoin Central Bank, which he accepts would “defeat the very purpose of having a fully decentralized digital currency like bitcoin.”

Attitudes to Bitcoin’s ultimately deflationary nature vary considerably, with some parties considering this characteristic as useful and a key opposing feature safeguarding against government control of money supply. The phenomenon of Bitcoin ‘whales’ is a more complex question, but one which, it is accepted, does not provide a barrier to use.

Nevertheless, Varoufakis ultimately considers that central control by a “democratic, collective agency” is all that prevents a nation’s money supply from being manipulated. He explained:

“… While apolitical money is a dangerous illusion, a Central Bank that is democratically controlled (as opposed to the indefensible notion of an ‘independent’ Central Bank) remains our best hope for a form of money that is for the people and by the people. Bitcoin, despite its many interesting features, can never be that.”

Since Varoufakis published the post, legislator involvement with Bitcoin in particular has advanced markedly, with services such as Coinbase set to test whether the marriage of Bitcoin and government acceptance can be an effective one. In terms of Greece’s future, Bitcoin’s potential in less stable economies is well-documented, and it will be interesting to see if the government seeks to address its status as part of the politics in the new Greece.

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