Capital Controls

Networks will form and needs will be met. The mechanics of Bitcoin adoption.

Julia Dixon on December 23, 2013

Bitcoin is fast, secure, nearly free, has a stable supply and has a high level of user control… its just plain better than the banks. You have to wonder why the hell everyone isn’t using it? But the Bitcoin economy is still fragmented and dependent on payment processors and exchangers.

Merchants accept bitcoin only to convert it back into their local fiat currency, and who can blame them? There just aren’t enough bitcoin accepting businesses out there and they have suppliers and landlords to pay. But bitcoin was meant to be a peer-to-peer currency, not a peer to exchanger to bank to bank to exchanger to peer currency.

Crypto will win the currency wars, but it may be a while before it reaches your home town. Bitcoin is better, but change is hard.

TradeHill planning Argentinian Bitcoin exchange as locals continue to struggle with severe capital controls

Julia Dixon on April 18, 2013

Argentinian’s are increasing looking for monetary alternatives as the country’s high inflation rate has brought on tough capital controls. Argentinian’s are banned from buying dollars, are subject to a 20% tax on foreign credit card purchases and restrictions on owning and valuing foreign assets. The country’s official inflation rate is 10.6%, but many estimates have the rate much higher, around 26%.

The Bitcoin market in Argentina is small but expanding (having doubled since February) and TradeHill, the recently resurrected Bitcoin exchange, is betting that the digital currency will take off in Argentina.

In an interview last week TradeHill founder Jered Kenna said that “Argentina possibly has the most demand I’ve seen out of Latin America for Bitcoins,” adding that his business has been talking to local banks and is planning a local office.

Mises.org: Cyprus and the Unraveling of Fractional-Reserve Banking

Julia Dixon on March 31, 2013

The Cyprus “bail-in” model of bank rescue, which seems to be gaining popularity, is simply frightening. Fractional reserve banking is built upon depositors trust in their banks, “for fractional-reserve banking can only exist for as long as the depositors have complete confidence”. Financial regulators are destroying their own system by making depositors fear for the safety of their money… they’re either that stupid or that desperate. Frightening.

Joseph T. Salerno sees the silver lining here arguing that Cyprus may bring about the unravelling of the current banking system and expose “the true nature of fractional-reserve banking for all to see.”

Bits and Pieces 29thMar13

Julia Dixon on March 29, 2013

The BRICS nations, 43 percent of the world’s population, are working on a new “development bank” set to bypass the World Bank and the IMF.

“There’s a shift in power from the traditional to the emerging world.”

The move is seen as a way for BRICS to protect themselves from the US and Europe’s financial trouble and as a way to increase their global financial influence.

Details here and here.

Russia to ban cash transactions over $10,000

Bitcoin’s market capitalization briefly hits $1Billion!

Texas want’s its gold back from the Fed.

DollarVigilante: World’s First Bitcoin ATM Heading to Cyprus

Julia Dixon on March 26, 2013

“While European politicos negotiate in Brussels, deciding the fate of other people’s money in Cyprus, the free market has already moved in to help Cypriots get access to their money via other means.”

The Dollar Vigilante‘s editor-in-chief and Bitcoin ATM CEO, Jeff Berwick, is planning the first Bitcoin ATM. “If we did this now, and we are moving quickly to make this so, we would be the only functioning ATM on the island.”

The planned ATM will allow users to deposit fiat and receive Bitcoin as well as send Bitcoin and receive fiat in return.

Bank robbery in Cyprus; depositors set to have up to 10% of funds seized

Julia Dixon on March 18, 2013

Like most of Europe, Cyprus and it’s banks are in trouble.

In a bailout deal with the Eurozone Cyprus’s bank account holders are being forced to pay the bill…not troubled bank bond holders, depositors. “The illusion that depositors don’t need to yank their money out of threatened banks because they’ll be protected has been shattered.”

Come Tuesday morning Cyprus’s bank account holders could see their balance shrink as much as 10%.

Mining.com: A History of Gold Confiscation the Infographic

Julia Dixon on March 10, 2013

A brief history of gold confiscation that “might make gold investors sweat” in one infographic…

GoldMoney’s Alasdair Macleod: Goodbye to Liberty

Julia Dixon on December 16, 2012

I think of money as simply a way to measure and store value, particularly the value of people’s time energy and effort. When the way in which you measure value is being manipulated and the method by which you store your productive value is being eroded, the implications for ‘liberty’ are frightening. This distortion of value is disruptive to people’s ability to interact with one another rationally and productively.

This frightful thought has not been lost on GoldMoney’s Alasdair Macleod who today writes “The US, UK, Europe and Japan are all implementing economic policies that must ultimately result in the complete destruction of their currencies; and if you destroy the means of exchange of goods and services, your people will starve.”

Business Week: Dollar-Less Iranians Discover Virtual Currency

Julia Dixon on December 1, 2012

As Hyperinflation continues in Iran, it seems that some Iranians have discovered a simple way out of the mess imposed on them by international politics, Bitcoin.

Bloomberg’s Business Week spoke to a few Iranians who have found a solution in Bitcoin. “Iranians are resorting to virtual currency to move money into and out of the country in a way that Western authorities find hard to detect.”

Forbes: FATCA Makes Foreign Banks Report Americans

Julia Dixon on November 28, 2012

FATCA or the Foreign Account Tax Compliance Act was enacted in March 2010 to improve tax compliance involving foreign financial assets and offshore accounts. The law requires foreign banks to report U.S. account holders to the IRS and in 2014 the IRS will start penalizing foreign banks for failing to comply.

Forbes’ Robert W. Wood explains that this could have serious consequences for Americans living abroad.