Relationship between Bitcoin and Banking
Bitcoin is a decentralized currency – how does this fit into the idea of central banks? Banks are one of the institutions that control global financial affairs, just as elected governments control laws.
When the going gets tough, some governments save themselves by fiddling with interest rates and currency devaluations, each of which reduces the wealth of those who earned that currency.
Take Argentina, for example. The government there has a track record of devaluing its currency and placing limits on weekly withdrawals. Given the mistrust that the citizens of the Argentine government have, would it be a good place for a currency like Bitcoin? The answer is yes, and in fact Argentina is one of the places where Bitcoin is booming. It gives Argentines a place to put their fortunes beyond the reach of the government, where the authorities cannot devalue it at will for political reasons or restrict citizens’ access to it.
With its ease of use for both consumers and small businesses, bitcoin allows commerce to thrive as well. Companies like BitPagos provide trading facilities to businesses, allowing them to transact with confidence and ease. It also allows companies to move money abroad and pay suppliers faster and less expensively than banks.
Europe has also seen volatile times. There were even “bailouts” in Cyprus, where money in banks was frozen. Greece has seen disruptive changes in governments trying to deal with the massive public debt. Cash outflows from Greek banks led to their complete shutdown in early 2015 as the country decided its fate with creditors. Bitcoin provided an opportunity to move funds out of the country and avoid bank withdrawal limits.
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Bitcoin growth in Europe will be strongest as regulators take a more conciliatory approach to the currency. Bitcoin won’t replace any major fiat currency any time soon, but it does offer some opportunities for growth.
Some of the countries where Bitcoin is likely to do well include Poland and Bulgaria. Regulators there are not very hostile to the concept of bitcoin as a currency or a tool for moving wealth. Bulgaria was hit by the financial crisis in the last decade and saw a run on one of its largest banks. Add to that the movement of people from Bulgaria to other parts of the European Union and you have a ready remittance market at hand.
Likewise, Poland has a significantly immigrant workforce and moves freely throughout the European Union. Polish companies such as LOT, the national airline, have been keen to adopt the digital currency. Bitcoin mobile recharges are commonly supported as bitcoin vouchers for cash sale at some retail outlets. Regulators have an open approach, and banks are generally tolerant of currency – at least in comparison to other countries.