Spain is the latest country to join the ranks of a citizenry looking towards an alternative currency to the Euro, and ECB control over a failing banking system in Europe. On March 20, downloads of three of the most popular Bitcoin applications which allow currency transactions to take place in the digital realm have increased, helping to drive the electronic currency up 15% in just the past two days.
Since Sunday, a trio of Bitcoin apps have soared up Spain’s download charts, coinciding with news that cash-strapped Cyprus was planning to raid domestic savings accounts to pay off a $13 billion bailout tab. Fearing contagion on the other end of the Mediterranean, some Spaniards are apparently looking for cover in an experimental digital currency.
The value of the virtual currency has soared nearly 15 percent in the last two days, according to the most-recent pricing data. “One hundred percent of that is due to Cyprus,” says Colas. “It means the Europeans are getting involved.” - Bloomberg
Bitcoins are a decentralized digital currency, that are not tied to any government central bank control. Created in 2009 by a developer using the pseudonym Satoshi Nakamoto, the intention of the currency was to create a way for common people and businesses to perform transactions between one another, using digital 'wallets' as a medium form for barter, trade, and business.
The positive aspect of bitcoins is their unique method of 'mining', which negates devaluation and inflation due to their limited supplies created electronically each hour. Bitcoins are generated in a 'block' of 25, which this allows the currency to float freely in the markets, and price values are determined by the market itself, not through monetary policy of a government or privately controlled central bank.
As the banking crisis in Cyprus continues into its 5th day, and with citizens and businesses unable to access Euro's through their local institutions, the potential for a collapse in confidence with the banks is occurring and growing all across Europe. With several Southern European countries such as Greece, Italy, Spain, and Cyprus all facing bank bailouts, and potential austerity in their economies imposed on them by the ECB and IMF, citizens in Spain are quickly turning to the alternative of Bitcoin, and this move is being validated by the more than 7% rise in value in just the past six hours, and 13% move in the past two days.