Cyprus, and its banking system, were the talk of the globe for nearly two months this past winter. All banks were closed by the government and then reopened in March a few weeks later, in an effort to prevent massive runs on cash. The Cypriot government received €2 billion on May 12, the first installment of the €10 billion ($13 billion) bailout approved by the IMF and EU.

Cypriots, clearly shaken by the levies (aka “bail-ins”) on personal bank accounts as a condition of the bailout, are now exploring Bitcoin as an alternative to the euro.

What is Bitcoin?

Bitcoin is the online, decentralized crypto-currency that has been trending on Twitter and on various news Web sites over the past couple months. Granted much of the talk has been about the one-day “crash” of bitcoin, the bitcoin craze coincided with the Cyprus bank closings and bail-ins. Despite the volatility, Bitcoin can be an excellent hedge against bail-ins for business owners.

Cypriot Businesses

Cypriot businesses can accept Bitcoin just like any other currency. Just as Paypal allows users to display “buy now” buttons on their Web sites, companies such as BitPay do the exact same thing for Bitcoin transactions. This phenomenon is becoming more common as familiarity with Bitcoin grows. Businesses large and small—from friendly neighborhood pizza joints in Montreal to—already accept Bitcoin. There are even Bitcoin ATMs being set up in Cyprus and Los Angeles to test a hard-currency version in the real market place. The recession of 2008, along with the bailouts currently happening across Europe are accelerating public acceptance of Bitcoin, as no central bank has valuation power over it.


A currency like Bitcoin, which isn’t tied to the global currency wars as far as its value, can protect businesses from arbitrary seizures (“bail-ins”) of its money. The challenge comes with businesses having to adjust and price their products and services accordingly, based on the day-to-day fluctuations in Bitcoin values. But successful business people, like Brian Ferdinand of Liquid Holdings, have taken on challenges like this to further their company’s overall success. The price of the Bitcoin will mostly be effected by Mt.Gox, the exchange that handles more than 80 percent of all Bitcoin transactions, according to its Web site. Consumers and business are assured that the value of Bitcoin is not the product of quantitative easing or other arbitrary monetary policy that central banks force upon the citizens of their respective countries.

While there are undoubtedly security and other issues with Bitcoin, it may have found it’s place in society, particularly for businesses, as a currency that is immune from central banking policies. Bitcoin wallets (where your currency is housed) can be stored offline, thus removing the element of potential hacking into your account. Crypto-currency does not have to be the primary currency your business uses, but it can certainly protect your assets far better than the banks.

  • Amanda

    Bitcoin is a no-brainer. This is the future of finance!