Bitcoin Adoption, Bail-Ins, and the 2013 Cypriot Financial Crisis

You'll commonly hear about fear of hyperinflation being a motive for shifting to a Bitcoin standard. Most likely you don't have to worry about that in your lifetime. However, there's another reason I find more applicable to first-world-country citizens; the concept of a bail-in.

You'll be familiar with the concept of a bail-out. The government gives failing banks enough cash to help them recover. Either this money comes at the expense of government projects and the taxpayers get told to deal with it, or the government prints the money and everyone using that currency gets told to suck it up. Either way, everyone in that country except for the bankers, government, and affiliated corporations lose.

The concept of a bail-in is relatively recent. In 2013, subsequent to the 2008 financial crisis, banks in Cyprus started failing left and right. To no one's surprise, this was the result of extreme mismanagement of debts, loans, and other negligent / criminal activity due to rampant corruption. Instead of a bail-out, the European Union ordered the government of Cyprus to test the first ever bail-in, wherein the government would go into every person's bank accounts and take all the money that was uninsured. No, I'm not joking. The banks only allow you to ensure up to €100k, so if someone had, let's say, €3,000,000 in a single account, the next day they'd be left with only €100k.

The European Union tested this on Cyprus as the Cypriot economy is incredibly tiny and they knew it would be easier for it to recover than any larger EU nation. A couple of years later, the EU announced they considered the Cypriot bail-in process a success. What do you think that means? I'm willing to bet anything that the next time we have a global financial crisis, bail-ins will start occuring all over the world. That's when mass adoption for Bitcoin begins, in my opinion. People use a bunch of different (and sometimes totally random and dismissable) reasons for why we're early adopters of Bitcoin. But in my eyes, anyone who buys Bitcoin before bail-ins start getting rolled out is early.