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Author Topic: Bitcoin interest spikes in Spain as Cyprus financial crisis grows  (Read 2477 times)

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Bitcoin interest spikes in Spain as Cyprus financial crisis grows

If you think your savings are under threat -- from a banking collapse, government seizure or anything else -- the traditional thing to do is withdraw your cash and stick it under a mattress. But could Europeans scared of losing their cash be turning to Bitcoins instead?

One of the side effects of the Eurozone crisis could be that some people turn to the deregulated, decentralised currency when they otherwise may not have even considered it. The events in Cyprus this past week -- where it looked like the government, in desperate need of money, had planned to impose a levy on savings -- seemed to have coincided with a slight spike in downloads of Bitcoin mobile apps in Spain, a country with its own wobbly economic situation. The Cypriot government has since rejected the plan to dip into the savings accounts of ordinary people, but it's spooked a lot of people across the Eurozone that their money may not be safe.

This was spotted by BGR writer Tero Kuittinen, who noted that three iOS apps -- Bitcoin Gold, Bitcoin Ticker and Bitcoin App -- each jumped up the App Store charts in Spain, all on the same day, as the news broke from Cyprus. Compare their download histories to those from a country like the UK and it's clear that the upward trend is more pronounced in the more at-risk nation. Bitcoin Gold's all-time high ranking of 83 in Spain came on 17 March; for Bitcoin Ticker, 68 on 17 March; Bitcoin App reached a high of 147 on 19 March. The highest rankings for those apps in the UK are lower -- 293, 201 and 48 -- and they were all records set months or even years ago. Indeed, there hasn't been any kind of correlation between the Cyprus news and an uptick in Bitcoin app interest in the UK, going from this.

The huge caveat to this, though, is that the iPhone's market share in Spain is tiny, at roughly four percent of the total smartphone market as of mid-2012. Only a percentage of people who trade Bitcoins will trade or keep up to date with prices on their smartphones, too. A spike in iOS app downloads in one Eurozone country is a terribly small sample from which to draw conclusions about whether the Eurozone crisis is driving more people across the continent to Bitcoins.

Since Android is by far the biggest smartphone OS in Spain with around 80 percent of the market, it makes more sense to look at Google Play. The data is patchier, though, so it's harder to draw firm conclusions over trends. Bitcoin Quote appears to have spiked recently, with a high of 718 on 18 March, while  Bitcoin Price made a huge jump from 1,014 to 551 between 13 March and 19 March. However, apps like Bitcoin Wallet and Bitcoinium didn't get a Spanish spike -- but did get one in the UK.

A conclusion to be drawn from this, possibly, is that there's a slight correlation going on here between news of Eurozone trouble and people getting themselves involved with Bitcoin, but of course (say it with me now) correlation does not imply causation. The anonymised nature of Bitcoins makes it hard to track down exact statistics as you could with any other currency -- that's the point of the whole thing -- so app downloads give us one kind of indirect evidence of increased usage.

Remember, though, that Bitcoin has been experiencing a huge surge in its value over the past few months. reported that it had reached its all-time trading high of £21 per BTC back in February, but its value continued to grow. The past month on Mt Gox, the largest Bitcoin trading hub, is quite revealing -- both the price, and the volume of Bitcoins traded, shot up on 18 March for both Euros and British Pounds, more so than the simultaneous rise in trading in US dollars.

It's the third-largest spike in volume in the past month, but unlike the previous two the effect on the price has been only to increase it -- the volume spikes on 7 and 12 March both drove the price down, probably in reaction to increasing fears that Bitcoin's new value is the result of a trading bubble (as evidenced by the vast increase in Bitcoin's market capitalisation over the past three months).

So it could just be that Bitcoins as a whole are becoming more popular, and the variation in the upward trend is just a part of that growth. But how about this -- on 16 March Google searches for "Bitcoin" in Spain absolutely rocketed, but in places like the UK and US there wasn't any effect. Again, it's just a correlation, but it's an extremely striking one.

There have been stories over the past year of people taking to Bitcoin in unexpected ways, with workers at a Swedish company now able to be paid in Bitcoins if they wish or the odd store in Germany switching its cash reserves to Bitcoin as added security from banking collapse. There's even a Bitcoin hedge fund in Malta, and a guy in Canada has said he will accept offers on his house in Bitcoins.

If an effect of the Euro crisis is that it makes a decentralised, unregulated digital currency look a safer bet than traditional government-backed currency forms for individuals, and not just some niche organisations, then that really would justify the claims of Bitcoin advocates that it's a revolutionary idea.

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