What It Means to Take Control of Your Own Wealth

The current situation in Greece is painful for the people there for a few reasons:

Capital Controls: The Greek government has closed all banks in the country and imposed a withdrawal limit of 60 EUR/day for people until July 6th. This means if you store money in a bank in Greece you can only use the equivalent of $67.26 dollars per day. The government has imposed these restrictions to prevent a run on the bank.

People in Artemide, Greece waited patiently at an ATM on Monday to wirthdraw the 60 EUR/day maximum the Greek government is allowing this week

Reduced purchasing power: July 5th is the day that the Greek people vote on their Eurozone membership. If they vote no, the EUR deposits in Greek bank accounts will be reverted to drachma, and the people of the country will likely lose ~40% of their purchasing power against the dollar. The government will need to continue to print money to help Greece increase exports and boost the economy. If they vote yes, the people will lose their government and be subjected to the austerity measures of the Eurozone.

These problems are unfamiliar to people in the US but very familiar to people in Argentina, Venezuela, and Cyprus.

Bitcoin offers a solution to both problems:

Avoid Capital Controls: Bitcoin allows individuals to take control of their own money and avoid the risk of being restricted by the capital controls that can be imposed by banks. People that don’t want to rely on third parties can use user-controlled wallets like Coinbase Multisig, Copay, or Breadwallet to be their own bank. Securing your own private keys can be an empowering feeling.

Avoid an Arbitary Reduction in Purchasing Power: There were fixed rules put in place that pre-determined the money supply of bitcoin, and those rules can’t be changed according to the whims of centralized parties. There will be 21M bitcoin created until the year 2140, and after that new bitcoin will stop being created. Currently, there are over 14.3M in existence and the rate at which they are created halves every four years. The next halving is set for July 2016.

For people outside Greece that can’t feel the pain directly this week, the events might be helpful in bringing some light to how the world financial system today really works. Money is simply a language to communicate value. Historically, large government institutions and banks have been in place to establish that language. In many cases, these institutions have brought trust to the languages. They’ve done a pretty good job for the most part. But the Greece situation illustrates that there are situations where it could actually be better to store your value in a system based on math rather than a system based on trust in people.

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