Thursday, March 28, 2013

Bitcoin Bonanza: Cyprus Crisis Boosts Digital Dollars

By John Carney

They won't make a sound no matter how many of them you try to toss in a bucket, and you can't pitch them in a fountain and wish for good luck. But make no mistake, bitcoins are getting big.

The online alternative currency, previously little more than a curiosity in financial markets since its 2009 inception, has zoomed in trading value since the Cyprus banking crisis erupted two weeks ago.

With fears spreading that even insured deposits might not be safe in similar nations hit by banking crises, those looking for a haven to store their wealth have fled to the complicated world of digital cash.

"Incremental demand for bitcoin is coming from the geographic areas most affected by the Cypriot financial crisis—individuals in countries like Greece or Spain, worried that they will be next to feel the threat of deposit taxes," Nicholas Colas, chief market strategist at ConvergEx, said in a report on the startling trend.

Read the rest here.


  1. Digital Friedmanite Monetarism.

    People used to vote with their feet. Now they are voting with their keyboards. Value is reflected in a Virtual Constant Background with which to reflect changes created by the State. The other Conservative Economic Theories, including ABCT, should not reject this development a priori.

    There is much to examine here that is GOOD.


  2. I suspect as BTC becomes more popular, competing "brands"of cryptocurrencies will arise thereby exposing the inherent weakness of cryptocurrency - it is NOT scarce.

  3. Spok An Cap -

    You are correct. One may invest in Platinum and Palladium as well as Gold. Zinc and Copper too.

    If BitCoin becomes a Multi-Market as you suggest, this may be studied as well.

    For example, if "Bit-Crons" goes into competition with "BitCoin", does Gresham's Law that "The Bad Money Drives Out the Good" apply if "Bit-Crons" offers a free toaster to sign up? How about "10 Free Bit-Crons for the first order using Bit-Crons"?

    It would seem that the interesting competition would come between competitors that expand their Digi-Coins at a faster rate than BitCoin or perhaps offered their exchanges Fully Free.

    My only point is that the attempt should not be rejected outright before the Utility has or has not been demonstrated. This is not an occasion to reconvene the Luddites in the neighbor's cave.


  4. Bitcoin has first-mover advantage, the network effect, and the hashing power.

    Any competing crypto-currency that offers a better technology will see its technology quickly adopted by Bitcoin. Bitcoin is now the 800-pound gorilla.

    There can only be one dominant crypto-currency - bitcoin is it. With that said, bitcoin can and will be the foundation that other, more anonymous, currencies can operate on top of - strengthening Bitcoin even more.

    Real is going to change...