With Euro Zone Problems, Bitcoin Experiencing Boost In Legitimacy

derekmead writes "Despite being used for drugs and beef jerky, Bitcoin is finding legitimate purposes. Bitcoin's decentralized convenience means international efficiency, in areas where local restrictions on money transfers to foreign companies make legal businesses cumbersome. 'I've been able to have cash in my bank account in a matter of hours using Bitcoin, rather than three days with traditional banking,' one British businessman in China told Reuters. In embattled Europe, Bitcoin offers some a viable alternative against central banks, said a Greek owner of an island bar and restaurant who accepts payment in Bitcoin. 'I don't put money in the banks. I trust the euro as a note, but I don't trust banks. I don't want them making money out of my earnings.' Indeed, Europe's financial woes are caused an unprecedented surge of interest in the alternative currency, as the continent loses economic credibility with each new bailout, according to a report by the Financial Post."

Comments

Re:I don't want them making money out of my earnin

[Darkness404]

There are plenty of problems with banks:

A) Capital controls. If you look at the places that have had currency troubles this is the first thing that happens. It starts innocently enough, first you have to "declare" that you have a "large" amount of cash and fill out a form. Next there are limits to how much cash can be brought in and out of the country. Next there are limits to how much money you can take out of the ATM and spend on your debit card.

B) Government reporting.

C) Possibility of collapse. I'm not just talking about a major economic crisis but minor ones such as 9/11 where many banks were not open and were not functioning fully.

D) Inflation will eat up your savings. How much interest is your savings account earning? My guess is ~.5% depending on your bank. The Federal Reserve's official (manipulated) inflation statistics say inflation is at 2.3%, using the older methods of calculating inflation which are not prone to manipulation, inflation is somewhere around 5%. That means you are taking a guaranteed loss. Of course putting cash in something else such as gold, silver, stocks, land, or heck, bitcoins carries some risk, there is at least a potential for reward, it is not a guaranteed loss.

Re:....someone get that link...

[silentcoder]

>Who then pays for the insurance? Those who want to borrow money today in exchange of returning more money tomorrow. Without them banks would close their doors.

Wrong. In every single respect. Moneylending predates banking and banking developed independently of moneylending - the two only merged (in historical terms) quite recently. Moneylending is a way to fund the operation of banks but it's certainly not the only way and it's definitely not a requirement of the concept of banking. Banking isn't even about MONEY per se.

Banking is simply the provision of a secure storage service for other people's property - usually money, but most banks also offer things like safety-deposit boxes to protect other kinds of property.

Until quite recently in fact (as in - within my lifetime) in many countries it wasn't even LEGAL to call yourself a bank if you didn't have a deposit/secure-storage service - lending companies had to go by more descriptive names such as "bond associations".

There are many different funding models for banks that can and have been used. The first real banks were established by the Knights Templar to protect the money of pilgrims - they didn't do any lending, they just did it as religious charity. More recent models have included mutualisms and even non-profit mutualisms (sometimes such mutualisms would use the deposited money to give loans INTEREST FREE).

These are all valid forms of banking - lending is something else, it's only one model that combines them. In that model, of course, that source of income is how insurance is paid.