Is Bitcoin now a safe haven currency? It wasn’t long ago when it was considered merely an interesting crypto-currency to buy illegal drugs on Silk Road. Now, citizens all over Europe appear to be flocking to Bitcoin as the European finance vultures circle above.
Europeans woke up this week with a lot less confidence in their banking system after European finance chiefs and the International Monetary Fund announced their plan to steal from private bank accounts in Cyprus in the form of a one-time “wealth tax” to bailout insolvent banks.
These “taxes” will be frozen and confiscated directly out of citizens’ private accounts.”Most of the 10 billion euros will go to bail out Cypriot banks,” according to the New York Times. Do taxes go directly to private banks now?
No wonder Europeans are furious and scrambling to pull their money out of the banking system and park it somewhere safe. And it appears that some are turning to Bitcoin to escape the clutches of the Troika.
Interestingly enough, several Bitcoin-related apps started spiking on the Spanish iPhone market over the weekend. Bitcoin Gold shot up in the Spanish iPhone Finance category from 498 to 72, and another app called Bitcoin Ticker zoomed from 526 to 52 in just one day. A leading service called Bitcoin App jumped from 194 to 151 between Friday and Sunday as Spaniards brooded over the Cyprus crisis.
The chart below depicts the spike in demand and price for Bitcoin since the Troika theft was announced:
Bitcoin, with its lack of central authority and quasi-anonymity, has always been seen as an alternative currency for those protesting central banking. It seems the number of people who are waking up to just how corrupt the system now view Bitcoin as viable.
Europe is not the only region to test Bitcoins. Last week, Simon Black reported that companies in Argentina are turning to Bitcoins to bypass recent draconian capital and market controls. Black features a car rental company that has not only begun accepting Bitcoins but are even offering discounts for doing so.
The 1-day rental rate for a basic car was 380 Argentine pesos. At the government’s official rate, that works out to be $74 USD. In Bitcoins, the same car rents for 1.13 BTC… which is approximately $54 USD. This is nearly 30% cheaper!
The benefit for the rental agency is the privacy; they can avoid all the costly fees, bureaucracy, and debilitating capital controls associated with a normal transaction. Plus, they can hold Bitcoins instead of the rapidly depreciating Argentine peso.
What’s more, even entire nations are interested in using Bitcoins to get around trade restrictions. Bloomberg reported on how Iranians are using Bitcoins to get around sanctions:
Under sanctions imposed by the U.S. and its allies, dollars are hard to come by in Iran. The rial fell from 20,160 against the greenback on the street market in August to 36,500 rials to the dollar in October. It’s settled, for now, around 27,000. The central bank’s fixed official rate is 12,260. Yet there’s one currency in Iran that has kept its value and can be used to purchase goods from abroad: bitcoins, the online-only currency.
The advantage for Iranians is that bitcoins can be swapped for dollars that can then be kept outside the country. Another plus: Regulators can’t easily track the transactions, since bitcoins aren’t issued from a central server. Bitcoin users can conduct business on virtual private networks, which hide customers’ identities.
“I believe that bitcoin is, or will be in the future, a very effective tool for individuals who want to avoid sanctions, currency restrictions, and high inflation in countries such as Iran,” Jeremias Kangas of localbitcoins.com told Bloomberg.
This unprecedented and brazen robbery in Europe may be what catapults Bitcoin to new heights. If more people view Bitcoin as a safe haven currency, how high can it go?
Max Keiser writes “Analysts now see $100 BTC within easy reach. I am sticking to my bet. I bet Warren Buffett 100,000 BTC that BTC reaches $200,000 before Berkshire Hathaway does.”