Bitcoin Enjoys Rally As Greek Crisis Deepens

Virtual currency Bitcoin has seen a rally as the Greek financial crisis has deepened.

Capital controls took effect in Greece earlier this month, restricting bank withdrawals to just €60 (£42).

There are concerns that deposits could be subjected to a haircut of up to 30%, while others fear a forced conversion to the drachma would lead to similarly negative consequences.

The price of Bitcoin stood at $223 on 8 June, but had increased 20% to $271 by Monday.

The digital currency is not controlled by the central bank of any national government, and payment can be made directly to another person without using an intermediary such as a bank.

One of the most popular topics on Reddit's Bitcoin forum is a discussion on the effects of the Greek crisis on Bitcoin.

Cryptocurrency expert Vitalik Buterin, writing under his username vbuterin, said buying Bitcoin was a good way to store value in turbulent times.

He said: "Sell it two years later when (the theory goes) your euros are down 30% from a haircut or down 40% from force-conversion into drachmas and your politically invulnerable cryptotokens are scot-free."

But other users pointed out to the volatility of Bitcoin, which sees rapid price fluctuations on a weekly basis.

One user, called 'bontchev', said: "The average Greek will have to decide: bet on cryptotokens that have demonstrated their ability to fall by 80% in a year, or bet on euros that haven't done so yet?"

The current Bitcoin value of $271 is still far lower than its peak of $979, reached in November 2013.

Yanis Varoufakis, who quit as Greek finance minister on Monday, has previously written about Bitcoin, calling it a "flawed currency blueprint"