Hellascoin: Greek bitcoin rival doubles in value as Grexit looms

A bitcoin-like cryptocurrency in Greece has surged in value since the beginning of June and continues to rise as fears of a Greek exit from the eurozone reach a critical point.

Hellascoin has more than doubled its market cap since the start of the month, dwarfing the percentage gains made by bitcoin in the same period, and prompting cryptocurrency proponents to predict that the altcoin will play a significant role within the Greek economy in the future.

Greece looks set to default on a debt repayment to the IMF on 30 June of €1.5bn ($1.7bn, £1.06bn), causing banks to be closed and limits on cash withdrawals from ATMs to be put in place. On Sunday (6 July), a 'no' vote in a referendum will see the country taking the first steps towards leaving the euro.

In the face of such economic uncertainty, Greek citizens have been looking towards alternative forms of investment, causing a spike in the price of bitcoin earlier this month.

However, according to the founder of Greek's largest digital currency platform, Bitcoins Greece, it is hellascoin that has been the been the biggest surprise.

"A Grexit is likely to result in a weak Greek Fiat currency, as well as a psychological crisis of identity for the Greek people," Bitcoins Greece founder Elenu Varela told IBTimes UK.

"I believe these two factors are likely to lead to a higher demand, not just for digital financial assets, but for specifically Greek financial assets such as the hellascoin."

Varela believes that a Grexit will cause hellascoin's star to rise even further and predicts its trade could increase tenfold in the coming weeks.

In anticipation of its increased relevance, 129 Greek companies have so far applied to accept hellascoin as a payment method, while the cryptocurrency is currently in negotiations for funding that could total more than €1m.

It is not the first time that a crisis in the eurozone has led people to turn to cryptocurrencies, most notably the banking collapse in Cyprus in 2013. During this time the price of bitcoin increased tenfold and made many people aware for the first time of the concept of cryptocurrency.

"During times of economic uncertainty, people invest in 'safe havens' such as gold," Varela said. "Nowadays, digital assets like bitcoin have joined that asset class. Because cryptocurrencies are global and do not rely on a healthy banking system, it is logical for people to stockpile them in times of uncertainty.

"Another trend that has been observed is that 'community currencies' thrive in times of economic uncertainty, so cryptocurrencies like hellascoin will very likely be in much higher demand in the event of a Grexit."