Amid the complex Greek crisis, professors, “economic” and “financial” experts offer solutions to the people in need. However with explanations like: “…People need to set some diversification strategies and build up some reciprocity relationships…”, most people will wonder what they mean. We will explain the more useful reactions that these experts offer and how the average Joe or Jane can protect them better when the next crisis hits. Bitcoin will play a pivotal role in all of this.
The experts love to use difficult words when on tv, radio or just doing an interview in a newspaper. What is this “diversification strategy” they go on about? Diversification strategies are strategies where people do not get, for example income, from one source or in one particular form. In so doing, you create a more stable situation for yourself. For example in some countries in the EU, employees receive they monthly pay in Euros and receive a percentage extra “pay” in the form of a special kind of “coupons”. With these “coupons” these people can buy food and other basic products. It is the same as a hypothetical employee is paid per month in Euros but receives a percentage of Bitcoins per month, except Bitcoin is more versatile than those coupons we spoke about.
Other diversification strategies are: using your currency to buy foreign currency, gold or any other precious metal that can be converted. With these strategies there are some problems that will crop up.
If you divided your capital in real currency ( US dollar, Euro, whatever) and a precious metal, it can be good because you are going to be less affected by a crisis because you didn’t put all your eggs in one basket so to speak. However precious metals have an Achilles heel; you are dependent on the price of these precious metals (for example gold price if you bought gold).
A lot of people run to precious metals like gold and silver for financial security and protection, which is understandable. Gold and silver as a currency, as well as barter and trade, have been used much longer than any other modern day currency. Gold and silver are used by nearly every society on earth plus it can be fairly easy traded in. However you have to protect yourself against frauds and fake gold, which requires some know how. Also when you really need currency and are selling off some gold or silver, the buyers will generally pay a lot less than the gold or silver price.
The most obvious diversification methods are using your capital and spread it around over different currencies. The more likely the currency is being used ( like Euro, Yuan or US dollar), the more versatile you will be at weathering a crisis.
However fiat currency has a lot of problems themselves. With normal currencies you are linked to diverse banks, be it national or private banks, among other things. These banks have to listen to ( quite loose) international and national guidelines. If the Greek government decided that people can only get 50 euros per week from their bank account than the banks comply with that request.
So what do you need to withstand crises according to the experts? If you want to survive a crisis, we focus in on the monetary side of the crisis; you need to have a currency or currencies that can be exchanged to any fiat in the world. The whole range of cryptocurrencies is a great solution here. Quick transaction speeds, much safer than bank or credit card use, low fees, can be used by anyone anywhere in the world, etc.
Bitcoin is one of the best examples of these digital currencies. For example; if a hypothetical crisis hit the UK, people can rely on Bitcoin to compensate because they have relative easy access to Bitcoin ATM’s or BTM’s if you will. This ensures that people that have Bitcoins can trade them in for British pounds or vice versa.
We see this also happening in the Greek debt crisis, where the only Bitcoin ATM in Greece has seen a surge of people taking to Bitcoin because it offers some stability, is decentralized ( so the Greek government has no control over it), easy accessible ,etc.
Bitcoin is also for everyone and everyone can buy them; it doesn’t matter if you have 10 euro-cents or 500 euros, you got the same deal. In the past, banks offered different interest rates on saving accounts or portfolios, depending on how a customer deposited at said bank. Bitcoin itself doesn’t have said inequality. The price is that amount of euros/dollars/pounds/etc, no matter how much you buy, you won’t get a discount or a more favorable position. Of course, there are some exchanges that will give you more than the actual Bitcoin price or sometimes less but that is up to the seller to determine which service to choose if he or she buys/sells their Bitcoins.
The Bitcoin price is kind of stable at the moment, hovering between the 230 – 260 US dollars. Some of the experts and bank spokespersons are cautioning people about Bitcoin because of its “volatility”. A little bit of volatility in the Bitcoin price is good because it may offer some profits for the people that own Bitcoins. For example if a Greek man or woman has bought 1 Bitcoin at 235 dollars in May and sold it at 262 dollars, he or she made 27 dollars profit. Some might say;” well that is not a lot” but if you convert it to percentages it is more than 11% profit in 2 months. This is much higher than any bank’s interest rate on a savings account. An added bonus is that most countries aren’t going to tax Bitcoin because they don’t see it as a “ fully fledged currency”.
Percentages, profits and hypothetical scenarios are all good and well but how can people weave Bitcoin into their current situation? If we look at the Greek debt crisis one thing is clear: People are running to get some Bitcoins. But how do you get some Bitcoins if you do not have the money to actually buy some? It all depends on how innovative you are.
If you have a spare room you can rent it out to tourists, with a kind of Bed and Breakfast flair to it, all the while accepting Bitcoin as preferred payment option. This can be done by setting the price for the rented room higher in fiat.
Bigger businesses like farms, book shops, coffee shops, etc can much more easily incorporate Bitcoin into their financial strategy because they have an already existing structure where they can “click” Bitcoin into that structure.
If we look to the Greek crisis, a lot of severely hit people live in the cities who don’t own land that they can cultivate. Most of these people live in apartment blocks and it is hard to cultivate anything there. However you can try to have small flower pots and sow/grow some vegetables (salad or tomato plant).
Another option open to them is being artistic. Draw, paint, airbrush, etc. works of art and sell them for Bitcoin. Another good way is looking for a job in the crypto sector. There are some websites and message boards that have been created especially for that purpose. If you are an unemployed programmer or someone with programming skills, these sites and message boards are always looking for programmers. Businesses can also issue their own “private currency” or own digital money, but this will cost more.
Now if you have a little bit of money stashed away for a rainy day, you can use it to create your own e-business, website or even a start-up project. Of course if you are already in a precarious financial position to begin with, it isn’t always possible to start an e-business. Another problem that people will have with this is that you need to have access to the internet. Of course you can go to internet café’s but if you have a very low income that isn’t always possible. The best thing you can do if you don’t have a lot of money, is to ask around the neighborhood who has internet. If he or she is willing you can make some kind of deal.
That way, reciprocity relationships will be created. This means that if you do something for someone (for example give a little of your surplus vegetables to those people), they will respond in kind if you are in need.
To withstand a crisis, you need to spread out your income (whatever form it may be) in order to soften the blows of the crisis. In this article we have shown that Bitcoin is, so far at least, one of the best currencies to withstand crises. This is mainly because of its decentralized nature, easy to use, the fast and safe way to transfer Bitcoin, Bitcoin is used all over the world, etc. Bitcoin is also a fraud/scamming deterrent because every transaction can be checked in the Blockchain. That means that a hypothetical corrupt politician who receives stipends to from someone to look the other way, provided it is paid in Bitcoin, will show up and will be exposed.
We have also explained the experts more difficult vocabulary to a more comprehensible one for everyone. After the explanations, we provided some easy to implement solutions that do not necessarily cost an arm or a leg to set up. Some easy to implement modifications can also be used by the Greek people to survive the current Greek crisis and we encourage the Greek people to embrace Bitcoin in these troubled times.