Cyprus, the Euro and How It Relates to Bitcoin

While reading about the banks re-opening in Cyprus I started thinking about how fundamentally different the fiat money system is from Bitcoin. What particularly struck me was the currency controls. The “officials” have put withdrawal limits in place limiting how much of their own money the people can withdraw. Putting the fact that it is their own money aside for a moment, it struck me how “their money” was no longer there even though it could be printed up and/or given to them in its digital counterpart. I’ve no information on how much of the Euro is represented in paper currency vs. digital but here in the US I understand the ratio to be 97% digital vs. 3% printed. So from the purely mechanical, logistical point-of-view enough digital money could be created easily and quickly with just a few keystrokes on the Central Bank’s keyboard. It could then be “loaned” to the troubled banks and everyone could get their money in digital form.

A fundamental difference, therefore, between Bitcoin users and the rest is that we Bitcoiners know how to manage our digital money whereas the traditional system users do not. If they simply had their own means of storing the digital version of their money there would be no reason for the Central Banks to withhold their own money from them.

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