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Bitcoin May Be Too Late for Greece, But Not Other Countries Headed In That Direction

()  “Fearing return to drachma, some Greeks use bitcoin to dodge capital controls,” Reuters reports. “Bitcoin: Greece’s new euro workaround?Fortune chimes in, reporting that “bitcoin appeals to people looking to hedge against unstable currencies and banking systems.”

Maybe… But for the moment, the digital currency may actually appeal more to financial journalists plotting how they would evade restrictions and guard their wealth than it does to strapped teachers and shopkeepers in Athens. While Bitcoin has enjoyed a bump in recent days, it’s not at all apparent that it enjoys a new status as the underground railroad for whatever remains of Hellenic prosperity. But premature though those reports may be, they’re likely a glimpse at the sort of concerns that will drive the development of digital currencies in the future.

“We’ve seen little or no direct evidence of Greek citizens actually moving capital into Bitcoin,” notes Peter Van Valkenburgh, Director of Research for the Coin Center, a cryptocurrency think tank. That’s actually not a surprise, when you think about it. “Capital controls remain very difficult to evade given that bank accounts have been frozen and ATM withdrawals capped,” Valkenburgh told me in an email.

Basically, Greeks who waited until the government clamped down to try to get their money out are in no position to purchase Bitcoin—or anything else. With cash machines dispensing only €60 and overseas payments restricted, they’re stuck. Reason‘s Jim Epstein recently reported that the country’s only bitcoin-dispensing ATM got exactly no action after the banks were closed.

But people obviously do want alternatives to capital controls, rumored government grabs of bank deposits, and a reversion to a drachma that would almost certainly plunge in value.

Greeks with foresight and cash in the bank have been hiding notes under the mattress or sending them out of the country for years, bringing deposits to an 11-year low by the end of June. More recently, the U.K.’s Royal Mint reported twice the usual sales of bullion coins—a traditional haven for value when money turns to toilet paper—to Greek customers.

Interestingly, gold purchases surged just as much in other European countries not subject to capital controls, but where concerns over the future of the euro are alive and kicking. The Fortune article speculating about Greeks evading controls with Bitcoin acknowledged that the real cryptocurrency action may be among “Spanish, Portuguese, Italians, and others worried about going down this route.” Unlike Greeks, they still have access to their euros.

“This route” means Greece’s experience, of course: the full range of economic stupid available to political leaders who have historically demonstrated an alchemical genius for turning gold to lead. Putting wealth beyond their reach in gold or Bitcoin may no longer be within the reach of most Greeks, but people elsewhere seem no more eager to subject themselves to bail-ins, capital controls, and political torpedoing of prosperity. Greece may occupy the headlines now, but it’s not the only country with a serious debt problem—and those elsewhere watching their own economies stumble are getting an unpleasant glimpse of what’s in store for them when the authorities try to “fix” the situation. France and Italy are frequently touted as the next likely casualties, though Spain and Portugal have their fans too.

But raids on personal wealth won’t just be emergency measures in the future if some government officials have their way. In May, German government economic advisor Peter Bofinger complained that physical cash—notes and coins—make it too easy for people to dodge taxes and regulations, and evade monetary policy. His solution? Abolish cash entirely. That’s a solution endorsed by Citibank chief economist Willem Buiter and Harvard University’s Kenneth Rogoff. They noted that eliminating physical cash and replacing it with electronic deposits fully trackable by governments would hamper off-the-books deals and allow for negative interest rates, by which governments nibble away at people’s holdings in order to advance their policies.

Denmark may be the first country to put this experiment into practice. Danmarks Nationalbank will stop printing banknotes and minting coins in 2016.

Precious metals would be a traditional hedge against such a move, but in a world of global transactions, digital currencies explicitly designed to resist monitoring and control are even more useful. They would allow payments to flow globally, around barriers imposed by political tantrums, and could preserve wealth against officials’ depredations.

Valkenburgh cautions that volatile Bitcoin offers no guarantees in this realm. “As a store of value, Bitcoin is not a safe choice. It’s a great choice if you want exposure to a huge potential upside and the inextricable risk of such a new network technology.” He allows that “having some exposure to Bitcoin could be a good thing for those hedging against a sovereign debt crisis but only as part of a balanced portfolio that also includes lower risk assets.”

But risk is relative—if you’re guaranteed losses because of official shenanigans, volatility in Bitcoin holdings might seem a better alternative.

And Valkenburgh notes that Bitcoin offers an effective means of getting value out of a country. “If you’ve got poor access to international markets for lower risk assets, you could perhaps use Bitcoin as a cross-border payments rail. Switch into Bitcoin because it is a low fee means of moving large amounts of value out of your country and then switch into some foreign asset to hold, say dollars.”

He points to Argentina as a case where cryptocurrency is already being used to evade capital controls less restrictive than those in Greece. The Argentine government trims 30 percent off payments sent through the nation’s banks from overseas, but it doesn’t even know about those denominated in bitcoin.

Bofinger, Buiter, and Rogoff didn’t respond to requests for comment about the potential impact of Bitcoin on their plans to abolish cash. But digital money’s ability to escape monitoring and control is precisely what bothers them about notes and coins.

For the moment, the use of Bitcoin to escape grabby governments and strict capital controls seems more a product of journalists’ informed imaginations than of actual practice in Greece. But those premature reports of evasion are signs that people are thinking in that direction. And we already know that depositors, investors, and business owners are taking steps to put potential into practice from Europe to Argentina and elsewhere.

Bitcoin, an alternative currency designed to resist political control, may have a future inadvertently guaranteed by the actions of politicians.