"Bitcoin means you need no longer be subject to bad banks or monetary policy. Get Bitcoin, opt out. Wait 10 years. Let's see who's right." | Balaji S. Srinivasan on Twitter

In my view if all comes down to inbalances created in periods of prosperity.

In the case of Greece, the country and its citizens could borrow very cheaply (low interest rates) for a while and that way the amount of credit (promises to pay money in the future) went up way to high. There are two ways or correcting this, devalueing your currency (they did this many times in the past, same like Spain, Italy, etc.) or suffering an extended period of deflation with all its ugly side effects. The first option was off the table since Greece no longer controls its own monetary policy, so they were forced in option 2 and this is still playing out. Greece is defacto on something similar as a gold standard so a lot of what is happening there resembles the great depression of the 1930's.

Venezuela also lived beyond its means for a long time made possible by high oil prices, their main export product. The policies of the Chavez and later Maduro government discouraged the production of other goods so they had to import them. As long as oil prices were high, no problem. Now, with way lower oil prices, devaluation of their currency is basically forced upon them, also with a lot of ugly side effects.

Bitcoin has the potential for the Greece scenario if people create inbalances. It is possible to create off-chain credit denominated in Bitcoin if other people are willing to accept that, it is also possible to have fractional reserve banking with Bitcoin off-chain. However, in the currenct monetary system, central banks create/allow inflation which forces holders of their currencies to play the game (savings accounts, stocks, bonds, etc.).

With Bitcoin this is very different because there is a cap on the number of Bitcoins and also the number of Bitcoins in existence is very predictable. With Bitcoin, just keeping your bitcoins in a wallet becomes an alternative to lending them out or storing them with a 3rd party in exchange for some interest.

We will still have all sorts of schemes where people will lose bitcoins, there are quite a few ponzi schemes active right now in the bitcoin community. But you don't have to play, it is way more similar to gold. A gold coin ten years ago is still a gold coin today, it didn't grow, it didn't shrink.

A banknote of 100 dollars today resembles something different than a banknote of 100 dollars 10 years ago. But you need to invest some time and energy in order to understand that, and it is my experience that not many people are willing to do that.

/r/Bitcoin Thread Parent Link - twitter.com