Cyprus Account Confiscations Make Bitcoin Mainstream

A safe haven from grabby governments

One of the most interesting side notes from the Cyprus bailout drama has been the sudden return to prominence of virtual currency Bitcoin after its fifteen minutes of fame in 2011.

In Cyprus, a combination of banking system volatility, strict capital controls and a dramatic loss of confidence in bank deposit insurance created almost perfect conditions for a Bitcoin comeback. In the last two weeks, the value of a single Bitcoin has exploded in value, from $40 to nearly $75 over the course of roughly two weeks, as depositors in Cyprus searched desperately for a way to keep their money from being confiscated during a bank bailout.

Bitcoin has become a new safe haven for investors similar to the way gold has historically been the favorite refuge of panicked investors during a financial crisis. Bitcoin has become so mainstream that worried Spaniards (many of whom see themselves as potentially the next victims in a financial contagion scenario) are downloading Bitcoin apps to their mobile devices at a rapid pace. There's even a plan to install the first-ever Bitcoin ATM in Cyprus so individual investors can exchange their "real" currency for Bitcoins without the need for suddenly unreliable bank intermediaries.