Kreuzberg

Bitcoin is Recognized as “Private Money” in Germany

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We should have competition in the production of money. I have long been a proponent of Friedrich August von Hayek scheme to denationalize money. Bitcoins are a first step in this direction.

– Frank Schaeffler, member of German parliament’s Finance Committee

The story of the German Finance Ministry stating Bitcoin is a form of “private money” has been making the rounds all over the virtual currency and technology world this morning and for good reason. This is a very, very big deal. Not just because some bureaucrat seemingly “legitimizes” the crypto-currency, but because it is the first commonsense approach from a major economy to-date.

While the U.S. government runs around like a chicken with its head cut off, issuing subpoenas and launching Senate investigations on Bitcoin, Germany is merely accepting the obvious. This is the wave of the future, you can either act like an incorrigible child and fight it, or you can accept reality and pave the way to the future. I’m pleased to see Germany, home to the most dynamic Bitcoin community on the planet, in Kreuzberg, taking a reasonable approach. Not to mention the fact I could never see a U.S. bureaucrat ever endorse Hayek or Austrian economics. The times they are a-changin’. From CNBC:

Virtual currency bitcoin has been recognized by the German Finance Ministry as a “unit of account”, meaning it is now legal tender and can be used for tax and trading purposes in the country.

Bitcoins is not classified as e-money or a foreign currency, the Finance Ministry said in a statement, but is rather a financial instrument under German banking rules. It is more akin to “private money” that can be used in “multilateral clearing circles”, the Ministry said.

“We should have competition in the production of money. I have long been a proponent of Friedrich August von Hayek scheme to denationalize money. Bitcoins are a first step in this direction,”said Frank Schaeffler, a member of the German parliament’s Finance Committee, who has pushed for legal classification of bitcoins.

Schaeffler said the new ruling showed German authorities were preparing regulations on how to tax bitcoin transactions. According to German newspaper Die Welt, the government has stated that the legal classification of bitcoin means that commercial profits that stem from using the currency may be taxable.

Kathleen Brooks, a research director at FOREX.com, told CNBC that classification by the German government gave bitcoin legitimacy to be used as a settlement currency in one of the world’s largest economies. She said this was a big step forward for the bitcoin movement.

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Welcome to Kreuzberg, Berlin: The Neighborhood with the Highest Bitcoin Concentration on Earth

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Fascinating article out today from the Guardian about the Kreuzberg area of Berlin, which has the highest density of businesses accepting Bitcoin in the world.  The associated video at the top of the article is also a must watch, as it becomes readily apparent how excited both the merchants and the customers are about using this free market currency.  I am completely convinced that the more people learn about Bitcoin and use it, the more exponential its adoption will become.  My favorite line from the video comes at the very end from Joerg Platzer, owner of the bar Room 77:

“Every day we do not start using a free currency like Bitcoin, we actually actively vote for the current system to continue.”

From the Guardian:

Like Chebli, Martens, whose Kersenvlaai (cherry cake) from her native Maastricht is rated as one of the best culinary offerings of the area, says she decided to accept Bitcoins because of the ease, cheapness and transparency of its payment system.

“It’s an easier way of digital payment than credit cards, which cost me a lot of money as a business and to which I’m forced to sign up for years,” she says.

These two tradespeople are among around a dozen in the Graefekiez, a cosy neighborhood established in the 19th century in the southern Berlin district of Kreuzberg, which currently boasts the highest density of businesses accepting the currency in the world. Its growing list of Bitcoin establishments includes a restaurant, a printing shop, a bar and boutique.

“Kreuzberg is traditionally an area in which people are very politically aware, critical towards existing systems and are constantly discussing and looking for alternatives to them, which makes it the perfect breeding ground for Bitcoin,” says Joerg Platzer, a staunch Bitcoin advocate who roams the neighborhood with a missionary zeal in search of new recruits.

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