From the quantity theory of money we know, that there is a link between inflation and the money supply. A substantial growth of the money supply through money printing at some point is going to cause a loss of purchasing power. Therefore it is interesting to take a closer look at how money is created in the Bitcoin world and how the Bitcoin money supply grows.

Money creation of a fiat currency

While Bitcoins are mined, producing fiat money is called money creation. In a simplified view, there are two different types of money creation. Money is either created by the central bank or money is created by commercial and other banks.

Money created directly by the central bank is called the monetary base. It comprises currency in circulation (notes and coins) and deposits of monetary financial institutions (MFIs) at the central bank. The monetary base is also called high-powered money because an increase in the monetary base can multiply to a much larger increase in the total money supply. The central bank applies a number of measures when it wants to create additional money. Through open market operations the central bank grants loans to MFIs against collateral. The loan amount is credited to the MFI whereby the MFI increases the deposits it holds at the central bank.

Commercial banks create money through lending. When a person holds a deposit at a bank, the bank can take this money and lend it out to a borrower. The borrowed money in turn will be held as a deposit at a bank (unless it is converted to paper money) which again can lend this money out. Money creation from lending already existed in ancient societies where all money was represented by physical precious coins. Imagine someone takes one coin to buy a vase. The seller of the vase holds this coin as a deposit at his bank. The bank lends this coin out to a second person. This second person also buys a vase for this coin and the seller brings the coin to the bank again. This process could be continued endlessly, as long as the bank finds enough trustworthy borrowers. In this example, one physical coin bought two vases worth two coins in total.

When money is created through lending this is also called fractional reserve banking. That’s because central banks require commercial banks to hold a certain fraction of its client’s deposits as a reserve in a central bank account. The European Central Bank’s reserve ratio is currently 1%. So if a client holds a deposit of EUR 100 at a given bank, only EUR 99 can be lent out to borrowers. We can calculate the maximum amount of money created from fractional reserve banking with the money multiplier. The money multiplier equals 1 divided by the reserve ratio. With a reserve ratio of 1% the theoretical money multiplier is 100, therefore a deposit of EUR 100 can be lent out so often that in total EUR 10,000 have been created.  This also highlights why the monetary base is called high-powered money.

The money supply M1

The money supply of fiat currencies is clustered in three groups called M1, M2 and M3. The definitions of what counts as money and to which of the three groups it belongs varies. An overview is sufficient for our purposes.

M1 is also called narrow money. It includes notes and coins in circulation plus deposits of people and non-financial businesses (the public) held in current or checking accounts at MFIs. M2 includes M1 plus savings deposits and time deposits. M3 includes M2 plus money market instruments with a maturity of less than 2 years.

Let’s take a closer look at the components of M1 for the Euro zone. It is important to note that M1 contains both, money created by the central bank as well as money created by commercial banks. 75% of M1 were created from fractional reserve banking by commercial banks. Only 22% of M1 is comprised of the monetary base which was created by the central bank. The monetary base contains EUR 300 bn of MFI reserves held in central bank accounts. These EUR 300 bn are the basis for fractional reserve banking. Therefore the effective money multiplier in the Euro zone is currently somewhere at 14.

Caption: Euro area money supply M1 as of June 2013; data source: ECB statistical data warehouse

Creation of the Bitcoin monetary base

Now that we have introduced money supply and money creation for a fiat currency, we can look at these terms from a Bitcoin point of view.

Bitcoins are created through mining. Mining is comparable to the original endowment of the public with money that was created by the central bank. Therefore mined Bitcoins are part of the Bitcoin monetary base. However, there are significant differences between mining and money creation by the central bank. When the public is endowed with new money after a currency reform, money creation by the central bank does not stop. The central bank keeps increasing the monetary base further which can cause inflation. In the Bitcoin currency system nobody can increase the Bitcoin monetary base beyond the Bitcoins that are created from mining. There is no central bank in power. Mining is the only source for the Bitcoin monetary base. Thus, mined Bitcoins are the Bitcoin monetary base – and not just a part of it.

Also, we never know how much money will be created by a central bank in the future. The central bank doesn’t know it itself because monetary policy depends on economic variables that can change quickly. In contrast, Bitcoin mining is predictable. We know with high certainty how many Bitcoins will be mined over a specified time and therefore the growth rate of the Bitcoin monetary base is predictable. As we can see on the following chart the growth rate will decline dramatically in the near future.

Caption: Bitcoin monetary base and growth (actual 01-2009 until 08-2013 and projection until 2029); data source: blockchain.info, own calculations

Bitcoin money creation from lending

As we have seen with the fiat currency, the second way of money creation is lending by commercial banks. If lending activities existed in the Bitcoin currency as well, the total Bitcoin money supply would exceed the number of mined Bitcoins (the Bitcoin monetary base). Such Bitcoin lending operations already do exist. Such sites are listed under the lending section of the Bitcoin Wiki Trade page.

Some of these sites are based on a peer-to-peer lending model and some operate like a Bitcoin bank. In the latter case the site collects deposits and grants loans to Bitcoin borrowers directly. Both models have certain advantages and drawbacks. I won’t go into this here. The important point to note is that Bitcoin lending does take place.

This means Bitcoins are not only created from mining but also from lending. However, the number of Bitcoin lending sites is not large. Even though they do not publish any figures, it can be assumed that relative to mined Bitcoins, the number of Bitcoins created through lending is small. Since Bitcoin lending currently is not explicitly regulated, there is no fractional reserve requirement. One could argue, this means that the money multiplier is theoretically infinite. A Bitcoin bank could lend the deposits it holds ad infinitum. It will be interesting to see how this evolves. Anyhow there something like a natural cap just from the fact that those who are willing to lend will not find infinitely many borrowers with sufficient creditworthiness.

Bitcoin money supply

If we want to know the Bitcoin money supply we first need to look at the number of Bitcoins in circulation from mining. This figure is currently at about 11.7 million Bitcoins. It represents the Bitcoin monetary base. The calculation of the Bitcoin market capitalization is also based on this figure. They are the same thing, in one instance expressed in Bitcoins and in another instance expressed as the US dollar value. That means the Bitcoin market cap equals the monetary base, currently it is USD 1.3 bn. If we want to compare the Bitcoin money supply to the money supply of other currencies we have to compare this USD 1.3 bn to the monetary base of the respective currency. Sri Lanka for example has a monetary base of approximately USD 2.5 bn which means that the Bitcoin monetary base is slightly more than a half of Sri Lanka’s monetary base.

What should not be done is to compare the Bitcoin monetary base to the M1 money supply of fiat currencies. As long as there are no figures on the total outstanding Bitcoin loan volume available, we won’t know what Bitcoin M1 is. We would need to sum up mined Bitcoins and outstanding Bitcoin loan volume in order to get Bitcoin M1. As we have seen on the Euro zone example, the larger part of M1 is created from lending. A comparison of the Bitcoin monetary base with M1 of other currencies would try to compare two incomparable figures.

Bitcoin has the potential to preserve long-term purchasing power

When we sum this post up, two things become clear. One, Bitcoins are not only created from mining but also from lending. Two, in order to measure the total Bitcoin money supply we need to add lending volume to the number of mined Bitcoins. What is the conclusion from this regarding the growth of Bitcoin money supply?

The Bitcoin monetary base grows at a predictable rate and the growth rate goes to much lower levels from 2014. That’s when the 2013 reduction to 25 Bitcoins per block jumps in. This means the Bitcoin monetary base is not of concern. Bitcoin lending deserves more attention as it is only at the beginning and could evolve to become more significant.

As a first estimate about the impact of Bitcoin lending two things can be noted. Currently a high Bitcoin volatility poses an exchange rate risk on both, borrowers and lenders. We can expect lending to increase with declining volatility. The second thing is that Bitcoin will remain in deflation as long as the user base keeps growing faster than the Bitcoin money supply. A deflationary currency increases incentives to build savings instead of borrowing money. Therefore we can expect the Bitcoin lending volume relative to the monetary base to be low. Probably much lower than we have seen it in the Euro zone example.

Since the Bitcoin monetary base growth will decline and Bitcoin lending is less significant than for a fiat currency, Bitcoin can be expected to remain deflationary for the years to come. This is a good message. It means that Bitcoin is not just an instant and cost effective payment network but also a stable currency that preserves purchasing power. Inflation is not fully eliminated because the money supply can grow significantly from lending. But as we have seen this is quite unlikely.

Written by Radoslav Albrecht

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Radoslav Albrecht studied economics and finance in Germany and Great Britain. He worked in investment banking and strategy consulting before he became a Bitcoin entrepreneur. At the beginning of 2013 Radoslav cofounded the peer-to-peer Bitcoin lending site Bitbond.net. He also runs the German website bitcoins21 which explains brick and mortar shops how they can integrate and accept Bitcoin as a means of payment.

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%.

From the Business Insider:

The Eurozone powers-that-be gave Cyprus a bailout — but with a startling condition that has never before been imposed on any major banking system since the start of the global financial crisis in 2008.

The Eurozone powers-that-be (mainly, Germany) insisted that the depositors in Cyprus’s banks pay part of the tab.

Not the bondholders.

The depositors. The folks who had their money in the banks for safe-keeping.

When Cyprus’s banks reopen on Tuesday morning, every depositor will have some of his or her money seized. Accounts under 100,000 euros will have 6.75% of the funds seized. Accounts over 100,000 euros will have 9.9% seized. And then the Eurozone’s emergency lending facility and the International Monetary Fund will inject 10 billion euros into the banks to allow them to keep operating.
Cyprus’s government tried to explain this deal by observing that it was better than the alternative: Immediate bankruptcy and closure of the major banks. In that scenario, depositors would lose a lot more of their money. Businesses would go bankrupt. And tens of thousands of people would be instantly thrown out of work.

But, still, not surprisingly, news that deposits in Cyprus’s banks would be seized triggered an immediate run on the banks.
Depositors rushed to ATMs and tried to withdraw their money before it could be seized. But the ATMs weren’t working. And the government has now made it impossible to transfer money out of the country.

So, assuming Cyprus’s government approves the deal (still pending), depositors will have some of their money seized on Tuesday morning.
But ever since the Great Depression wiped out a big percentage of the world’s banks, vaporizing the bank depositors’ savings in the process, banking system regulators have tried to do everything they can to protect bank depositors.

And they are smart to do so. Because the moment depositors think that there is risk to their savings, they rush to banks to yank their money out.

That’s called a run on the bank.

And since no bank anywhere has enough cash on hand to pay off all its depositors at once, runs on the bank cause banks to go bust.

That’s what happened to hundreds of banks in the Great Depression.
But now, thanks to Eurozone’s bizarre decision in Cyprus, the illusion that depositors don’t need to yank their money out of threatened banks because they’ll be protected has been shattered.

Depositors in Cyprus banks will lose some of their deposits.

They will be furious about this.

And they will, rightly, feel that it is grossly unfair — because depositors in the bailed-out banks in Ireland, Greece, etc. didn’t lose their money.

And they will feel like fools for not having taken their money out.

And … here’s the important part …

Other depositors at weak banks all over Europe, in places like Spain, Italy, and Greece, will rightly wonder whether this is the beginning of a new era of bank bailouts, an era in which bank depositors are going lose some of their money.

What do you think those other depositors in Spain, Italy, Greece, etc., are going to feel like doing when they realize that, if their banks ever need a bailout, they might have their deposits seized?

That’s right. They’re going to feel like yanking their money out of their banks.

And if some of them yank their money out of their banks, well — then the financial condition of those banks will go from weak to insolvent.

Update: Cyprus parliament rejects bank deposit tax, putting bailout in disarray.

“Weidmann is the latest in a string of policymakers worldwide to warn of the threat of a ‘currency war’ as central banks pump out cash to support their economies, reducing their value in the process.”

“He said the pressure that Japan’s new government has put on the BOJ to deliver bolder monetary easing endangered the central bank’s independence, as did the actions of Hungary’s government.”

“‘Already alarming violations can be observed, for example in Hungary or Japan, where the new government is interfering massively in the business of the central bank with pressure for a more aggressive monetary policy and threatening an end to central bank autonomy. A consequence, whether intentional or unintentional, could moreover be an increased politicisation of exchange rates, …So far the international currency system has come through the crisis without a devaluation competition, and I hope very much that remains the case,’ Weidmann added in a section of his speech entitled ‘independence of central banks in danger’.”

“Last Wednesday, Russian central banker Alexei Ulyukayev said Japan is acting to weaken its currency and there is a danger that others will follow suit and foster a round of destabilising devaluations.”

“Plans for the ECB to begin supervising banks were consistent with a trend outside the euro zone for central banks to be given more tasks that lie beyond their core mandate, Weidmann said.”

Read the Reuters post here.

“This is a story that started with the end of the First World War, and involves a world which replaced laissez-faire with political motivation in economic and monetary affairs, moving away from wealth-creation into wealth-destruction in the cause of the common good.”

“…government and central bank manipulation of their economies and fiat monies has succeeded in deferring the bankruptcies and liquidation of accumulated malinvestments, to the point where their cost can no longer be sustained.”

“Never in modern history have we seen so many governments agreeing to make the same mistakes; and it is hard to see, with the underlying inter-connectivity of their banks, how there is room for dissent.”

“The global banking system for the last five years has struggled with insufficient capital, over-valued collateral, and an underlying tendency for balance sheets to deflate. Their respective governments through their central banks are back-stopping these insolvent institutions by flooding them with both sovereign debt and fiat money, and manipulating credit markets to maintain valuations.”

“Take these distortions away and we see the private sector economy still contracting four years after the credit bubble burst, a fact that is concealed by the expansion of both government spending and fiat money. Otherwise, bank balance sheets would have contracted, wiping out their aggregate capital, in some cases several times over.”

“The manipulation of credit, money and prices has made economic calculation impossible.”

“There is little difference in this respect between the communism of failed states in the past and the regulated and planned economies of today, except perhaps in the degree of state interference. As happened with the Soviet Union, eventually ordinary people, by acting in their individual interests, will bring about the downfall of their governments. It is bound to happen unless governments reverse course.”

“Banks are interconnected through interbank and cross-border loans. They are also linked by counterparty risk in derivatives and by off-balance-sheet hypothecation of collateral. … The level of bank capital behind on- and off-balance sheet liabilities is inadequate to cover either hidden losses, systemic contagion or a resumed downturn in the global economy. … Systemic risks include sovereign defaults, significant falls in collateral values, and counterparty failure in derivative markets.”

“The banks have become corrupted institutions continually on the verge of failure.”

“The US economy … outlook is therefore one of deteriorating government finances, and a possible need to raise interest rates sooner than expected to curb the inevitable price-inflation effects of accelerated money-printing.”

“The burden of the euro-system on Germany, the Netherlands, Finland and Austria is far too great for them to bear, and we can expect mounting political dissent in this election year for Germany. … The eurozone’s banking system is under-capitalised and already bankrupt on realistic assumptions.”

“In Japan … savers are now dissaving at an accelerating rate, leading to a developing trade deficit.”

“The UK … is also exposed to a disproportionately large finance and banking sector with high international exposure, particularly to the eurozone, which will be an unsupportable burden on the state if the banking crisis develops further in 2013.”

“Watch out for developments in the following

• Inflation, which will pick up unexpectedly if there is a shift of preference from money to goods, the consequence being accelerating stagflation. Bear in mind that governments usually under-report inflation, and prices in the US, UK and other nations are already increasing at a significantly faster rate than CPI measures suggest.
• Interest rates, which may have to rise sooner than expected due to inflationary concerns. This being the case, an implosion of asset prices could begin if markets price in rising interest rates before they happen, destroying the ability of central banks to retain control of prices in credit markets.
• A further downturn in the US private sector economy, (excluding government).
• Rising bond yields for Spain, Italy or France.
• Deterioration in Japan’s trade balance and weakness in the yen.
• The bursting of bond market bubbles, particularly in the US, UK, Germany, Japan or France.
• Crisis meetings by governments and central banks that resolve nothing and only further public understanding of their inadequacies.
• Derivative markets, and their exposure to counterparty risk, hypothecation and rehypothecation of collateral.
• Silver markets, where there are large short positions held by the bullion banks and so are vulnerable to a vicious bear-squeeze. If this happens a sharp rise in gold prices will also be triggered, and possibly spread to other metals and beyond.
• Growing social unrest.
• Further clampdowns on personal freedom”

“We are one year closer to a renewed banking and financial crisis, the pace of which is quickening, and which can be expected to turn eventually into a fiat currency collapse. These systemic risks increased in 2012, most notably in the eurozone, but also elsewhere. None of the solutions applied anywhere did any good.

On the evidence to date, it has become less likely any Western government can or will take the right steps to avoid an eventual collapse of their currency, so 2013 is more likely to realise systemic failures than 2012.”

Read the post in its entirety here.

Bitcoin makes an appearance on the National Geographic Channel. http://channel.nationalgeographic.com/channel/videos/bitcoin-the-new-way-to-pay/

SilkRoad and Bitcoin make an appearance on Australian TV. http://www.youtube.com/watch?feature=youtu.be&hl=en&v=hmiBzvW4P40&gl=US

Last week a German court ordered the German central bank to audit its sovereign gold holdings, which includes its gold stored with the Fed in NY. http://www.zerohedge.com/news/2012-10-22/german-court-demands-bundesbank-audit-sovereign-gold-holdings

Then there were reports that in 2001 the German central bank “decided to voluntarily pull two thirds of its gold holdings held by the Bank of England.” http://www.zerohedge.com/news/2012-10-24/why-did-bundesbank-secretly-withdraw-two-thirds-its-london-gold

Report – 90% of consumers in developing countries interested in using mobile payments

“The study has also found that consumers’ needs for financial services in developing countries are far more sophisticated than previously believed and go well beyond the established transaction set offered by mobile money services today.”

http://www.thepaypers.com/news/mobile-payments/90-of-consumers-in-developing-countries-interested-in-using-mobile-payments-services-report/748985-16

There has been talk in Europe of handling debt issues by issuing new bonds “part-backed by gold” particularly in the case of Portugal and Italy has these countries have relatively large gold reserves. However, there are some legal issue as gold reserves are owned by the central banks, not the government. The two below links from The World Gold Council and BullionVault discuss these issues. http://www.gold.org/government_affairs/new_financial_architecture/gold_and_the_eurozone_crisis/

http://goldnews.bullionvault.com/gold-bonds-eurozone-102420122

Dwolla updated it’s iPhone app with “the added ability to view and pay money requests.” http://www.mybanktracker.com/news/2012/10/23/dwolla-mobile-option-pay-money-requests/

Financial Institutions: How Much More Will You Have to Spend on Anti-Money Laundering Programs to Avoid Criminal Prosecution?

“This June, the Justice Department brought criminal cases against a number of check-cashing businesses and their owners for failing to implement effective AML programs – remarkable because they are among the first BSA prosecutions brought against non-bank financial institutions and individual owners.”

http://www.forbes.com/sites/insider/2012/10/24/financial-institutions-how-much-more-will-you-have-to-spend-on-anti-money-laundering-programs-to-avoid-criminal-prosecution/

An interesting piece from MoneyMorning Australia on Why a Return to the Gold Standard Could Actually Be Bad

“History tells you that governments will always try to fiddle with the money supply in order to pay for votes and wars… In order to fiddle with the money supply, the government needs control over the money supply. Most importantly it needs legal tender laws. Legal tender laws create a money monopoly that makes it illegal for people and businesses to transact in a competing currency.”

“Bottom line: if the US government could easily confiscate gold while most of the population still had a concept of sound money, don’t you think it will be much easier when 99% of the population has no concept of sound money? … And because returning to a gold standard would involve devaluing the currency … governments would only do this after it has confiscated private gold.”

They also  note that due to  “Part IV of the Banking Act 1959” gold confiscation is a possibility in Australia “when the Governor-General says so.” http://www.moneymorning.com.au/20121025/why-a-return-to-the-gold-standard-could-actually-be-bad.html

Bitfloor boosts security and reopens with the promise to restore stolen funds as soon as possible. http://bitcoinmagazine.net/bitfloor-back-in-business/

Bitcoin Magazine reviews the Mega-Corporate and Government Attention on Bitcoin over the last year here,  http://bitcoinmagazine.net/a-recap-of-mega-corporate-and-government-attention-on-bitcoin-this-past-year/ And they offer a summary of the London Bitcoin conference here, http://bitcoinmagazine.net/annual-bitcoin-conference-takes-place-in-london/

It would seem that the Bitcoin conference brought about this interview on RT’s The Keiser Report with privacy extremist Frank Braun about “sneaker net and privacy, the libertarian case for bitcoin and a flourishing over the counter bitcoin exchange.”

Video Link

Check out Frank’s website http://shadowlife.cc/

And view the slides from his talk at the Bitcoin conference “Bitcoin in the Counter-Economy” here, http://shadowlife.cc/files/btcotc.pdf

Use Bitcoin anonymously with mixing services. https://en.bitcoin.it/wiki/Mixing_service

And Bitcoin is big in Finland http://www.bitcoinmoney.com/post/31414125252/bitcoin-finland-newscast

View charts showing the historical price of all sorts of things, in gold grams. http://pricedingold.com/ I wish I had known about this website years ago! It might have helped me win a debate or two on gold and prices.

Visualizing the world’s gold stock. http://www.zerohedge.com/news/2012-09-26/presenting-warren-buffetts-gold-cube

Scarcity!

James Turk conducts a 36min interview with Professor Pedro Schwartz. It’s an excellent lesson on the state of the European banking system.  http://www.goldmoney.com/video/pedro-schwartz-on-the-creation-of-money-out-of-thin-air.html

Facebook asking users to tell them their friends real names?

http://blogs.computerworlduk.com/digital-policy/2012/09/now-facebook-want-you-to-grass-up-friends-not-using-their-real-name/index.htm

BitPay, an automated payment processing system for Bitcoin, announced that they now have over 1,000 merchants accepting Bitcoin. “The sheer volume of new merchants has started to explode over the last month as more businesses begin to see the value in accepting bitcoin payments,” http://pymnts.com/news/businesswire-feed/2012/september/11/bitpay-exceeds-1000-merchants-accepting-bitcoin-20120911005855/

There really isn’t anything about this Mitt Romney/Bitcoin ransom note story that I approve of. I’m not a fan of Romney, theft or ransom notes and Larry Flynt just creeps me out. But you’ve got to admit, this whole saga is very amusing! The plot continues to thicken. http://rt.com/usa/news/flynt-romney-records-tax-802/

Read Flynt’s post here, http://larryflynt.com/larrysworld/larrysstatements/what-is-mitt-romney-hiding-reward/

Attention Digital Currency providers; your US market has grown by 8.2% as “more Americans have limited or no interaction with banks.” Beyond all the issues with fiat, the Fed’s banking system is inefficient and expensive. As such, more and more people who are struggling in a tough economy are simply ‘opting out’. http://www.washingtonpost.com/business/economy/more-americans-opting-out-of-banking-system/2012/09/12/6380b986-fcf1-11e1-a31e-804fccb658f9_story.html

Money laundering rules are not only ineffective, but they hurt the poor. Just like the above story, these rules raise the price of banking and price a lot of people right out of the market. http://www.forbes.com/sites/danielmitchell/2012/04/20/world-bank-study-shows-how-anti-money-laundering-rules-hurt-the-poor/

As the Euro Tumbles, Spaniards Look to Gold “According to Marion Mueller, vice president of the Spanish Precious Metals Association (AEMP) … ‘Up until very recently, to speak about gold as an investment or as wealth protection insurance was grin-provoking. That is changing,’ … She notes that since 2010, when the Spanish economic downturn became inescapable, a growing tendency to invest in physical gold developed among Spanish investors, brokers, and financial institutions.” http://www.resourceinvestor.com/2012/09/10/as-the-euro-tumbles-spaniards-look-to-gold?ref=hp

John Williams of Shadowstats.com, discusses ‘virtually assured’ hyperinflation.

“the Treasury actually publishes financial statements that are based on generally accepted account principals, GAAP accounting, … You’re seeing an annual deficit right now of about 5trillion dollars per year. …  That’s beyond containment. You could raise taxes to 100%, take all peoples wages and salaries and you’d still be in deficit.”

“If you’re a politician and you raise an issue like that, you have to have a solution or you don’t get re-elected. … They don’t have a way out of this.“

“right now inflation is running above the Treasury bill so your losing money in real terms. … Yet, if you went out and bought canned goods you would probably make more on that over the next year.”

http://usawatchdog.com/hyperinflation-is-virtually-assured-john-williams/

A small town in Greece, Volos, has found an unconventional way to deal with their economic difficulties. They have begun using their own local currency which they call TEM. http://www.bbc.co.uk/news/world-europe-17680904

Bitcoin’s popularity (which is the object of my latest obsession) is on the rise and the Room 77 restaurant in Berlin is now accepting it as payment. http://www.npr.org/2012/06/01/154140277/berlin-restaurant-experiments-with-virtual-currency

Many digital currency enthusiasts have speculated that DC’s will not become ‘main stream’ until people are forced to find an alternative to crashing fiat currencies. Unfortunately, I agree and articles such as this prove the point. Bitcoin’s European volume is “skyrocketing” according to Charlie Shrem, chief executive of BitInstant LLC. “We’re getting requests from people literally saying, can we mail you euros? “http://business.financialpost.com/2012/06/08/euro-fears-boost-virtual-currency-bitcoin/ .