Greece Is Slowly Cutting Itself Off From the Internet in Attempt to Save Its Economy

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In a desperate move to keep Greece from hemorrhaging the last of its cash, the Greek government issued "capital controls" last week to keep people from spending money outside of the country.

Unfortunately, because of how the Internet fundamentally works, that means Greeks are unable to pay for Internet services that aren't based in Greece — which is most of them. People within Greece are reportedly having problems accessing Paypal, iCloud, Dropbox, the App Store and other online services that require payment to continue working.

The Internet isn't the global, decentralized democracy it might seem. The Internet is a global network, sure, but everything that exists on the Internet is hosted in a physical place in one country or another. It's one of the reasons there's so much foreign panic around the Snowden revelations — the NSA can only issue requests for data from companies that keep their data in the U.S. (Unless they just spy on foreign nations.)

Source: Martin Bureau/Getty Images
Source: Martin Bureau/Getty Images

So when you keep people from moving money through other countries, services that are available globally but live in certain countries just stop working. And the most dire consequence for Greece is that some Greeks now can't do business with other Greek people if the payments have to move across servers outside the country. Even Greek websites that are hosted in other countries can't continue paying their bills and face a shutdown.

If this keeps up unabated, Greek businesses that have entirely Greek customers but rely on foreign services — like a local newspaper that sells subscriptions via Paypal — will need to seek a new payment solution. It's already impossible to activate a new iPhone, even if you're using Cosmote, the major Greek service provider.

Alternatives are springing up. While some Greek tech developers are fleeing the country en masse — one called Greece a tech developer "graveyard" — others are asking for the Internet's version of foreign aid. Greek startup founder Panos Papadopoulos built an online form for Greek startups so that they could apply for foreign supporters to cover their costs, catching the eye of Internet godfather and tech investment kingmaker Marc Andreessen.

After the wave of support from Andreessen and others, Papadopoulos rushed to create a site called ZeroFund to help more Greek founders who are foxholed away by capital controls get access to hosting, domain registry and ads.

In the mean time, Bitcoin — a decentralized, politically-agnostic payment method beloved of financial futurists — is experiencing a surge up to about $270, after months of stagnation as people lose faith in their banks. There are restaurants starting to accept Bitcoin, one of which is giving a 20% discount to anyone who pays in BTC.

The online Bitcoin community has been buzzing about what the Greek crisis means for the future of currency, but will Bitcoin sweep in and be a new alternative Greek currency? No, that's a futurist pipe dream. As the notorious Canadian crypto-savant Vitalik Buterin said on a Reddit thread about the referendum, Bitcoin is really more of a place to hold your money as a store of value so you can flip it when the chaos dies down.

"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" Buterin wrote, "and your politically invulnerable cryptotokens are scot-free."