In an unexpected move, Cyprus announced today that they are replacing the euro with Bitcoin, an unregulated, decentralized virtual currency that has become all the rage. Cyprus President Nicos Anastasiades said in an an interview, “Regulation and centralization are what got us into this unholy mess and it was time to do something just a little crazy.”
Effective Monday, any euros held by Cyprus residents can be exchanged for the digital currency at a rate expected to be around 1 Bitcoin : €72. That works out to about $93 US and is expected to stay stable or even rise in the coming weeks due to increased demand.
Reached for comment, French President François Hollande and German Chancellor Angela Merkel both warned of grave consequences for the economy of Cyprus. Hollande went on to ask, “What of all of zee grandmothers who don’t use zee Internet?” Bitcoin couldn’t be reached for comment.
A little history
Bitcoin didn’t see itself as the currency of any particular country and was initially created to provide a decentralized cryptographic digital currency based on open-source, peer-to-peer protocol. What Bitcoin accomplishes is to allow secure digital transactions without transmitting personal information. There’s a challenge, clearly, that Bitcoin could be used for drug and terrorist transactions, giving Cyprus a leg up in both industries.
Portual, Spain, Italy and Greece are said to be watching the progress of Bitcoin as the new cypriot currency to see if they, too, can shed the Euro and the austerity measures forced on those governments by Northern Europe. Spanish President Mariano Rajoy Brey was quoted in the New York Times as saying, “Los de Europa del Norte pueden poner esos euros donde el sol no brilla,” which, translated, means, “Those arrogant Northern Europeans can stuff their euros where the sun doesn’t shine.”
With the potential for more banking crises in the Mediterranean and beyond, Bitcoin stands a good chance of continued fast growth and wide adoption. Rather than trusting any 3rd party with your funds, Bitcoin stands to be a currency that rises above the control of today’s money regulators.