The Financial Crisis and Digital Currencies

Abstract

Digital currencies are mainly known for their part in illegal activities such as money laundering or terrorist financing. However, the purpose of this chapter is to explore whether digital currencies could have a potential benefit for countries that are in financial crisis. Since 2007, the global financial crisis has affected many different countries and no more so than Greece, where austerity measures and fiscal issues have caused an enormous social and political upheaval. The global economy has been hit by the lack of trust and confidence the ordinary person has for banks, financial intuitions and in some countries, the governing body. Banks were created in the 1400s in Florence to ensure that society could trust that their money or currency at the time would be safe. Following the global crisis, this trust and confidence in banks and financial institutions has been eroded. This chapter considers whether a digital, decentralised cryptocurrency, where peer-to-peer transactions and lending takes place, could replace the trust and confidence that was once found in banks.