In Cyprus, government officials desperate to shore-up bloated budgets have been working on ways to raid the bank deposits of their citizens. The most recent plan would have citizens with more than 100,000 euros in deposits take a 30% haircut.
Not surprisingly, this has sparked bank runs and all manner of other chaos in Cyprus as citizens rush to protect their money. And now there seems to be a great deal of interest in citizens opting out of government currency altogether. Bitcoin, a “decentralized digital currency” according to Wikipedia, may soon be opening an ATM in Cyprus.
Interest in Bitcoin has soared, especially in southern Europe. As Yahoo! reports, downloads of Bitcoin-related apps started rising in Spain over the weekend. For instance, Bitcoin Gold spiked in the Spanish iPhone Finance category from 498 to 72, while another app called Bitcoin Ticket zoomed from 526-52 in just one day. Leading service, Bitcoin App, jumped from 194 to 151 from Friday and Sunday while Spaniards took notice of Cyprus.
Between governments raiding the savings accounts of citizens, or governments mismanaging monetary policy and devaluing the currency, should we really be surprised that some early-adopters are looking for ways to opt-out of government currency altogether?
It’s a good thing. Competition between currencies is as good as competition in any other marketplace. If governments don’t want citizens to leave their currencies behind, they could manage their budgets and currency values better.
Bitcoin is no doubt a long way from becoming anything like mainstream among most world citizens, but the way things are heading that may soon change.