Topic: Greece, the EU, and Bitcoins - page 2. (Read 10847 times)

Use local currencies rather than just using bitcoins.

I'm sure everybody is fairly familiar with what is going on in Greece.  For those who don't know, a (very) simplified description is the following.

Greece, like the rest of the EU bloc, is under the Euro.  The Euro is a unified currency which spans over twenty nations.  Some of these nations are more economically prosperous than others.  Germany, for instance, can produce more value into the global economy than Greece.  In a multi-currency situation, this would lead to a devaluation of the Greek currency so that its goods could be purchased cheaply by the Germans and others with more economic power.  While the situation is not as good for the Greeks as if they were able to compete evenly, they can't compete evenly anyway, so at least this way they can sell something at some price.  However, the country is locked into the Euro.  Therefore, it is locked into a 1:1 exchange rate with all Euro countries (France, Germany, etc.)  Thus, it cannot offset its economic weakness with a devalued currency, so it must compete on even footing with other Euro countries, which it cannot do, as it is less economically and technologically developed.  Thus, we have a crash.

On the another stage, the US buys things from India because the RUP is devalued relative to the USD.  This works out well for both countries, as it enables the US to get cheap goods, and India to sell goods which couldn't compete with the goods of more prosperous and developed nations on even footing.  (Opportunity cost is at the root of this).  However, if the US and India were locked into an identical currency, the economic weakness of India today would look like a paradise relative to what we would see then.

The parallels between the Bitcoin and the Euro are obvious.    Say the BTC becomes a global currency.  How do we deal with the issue of necessary currency value differentials to accommodate the differing capabilities of disparate geographical locations?  Obviously, if we can't, then the BTC is worthless in all but the economic top-tier countries, because it cannot be used save on an equal footing with such countries.