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The Home Of Central Banking Embraces Bitcoin

[heading]The Home Of Central Banking Embraces Bitcoin[/heading]

The Netherlands, and specifically Amsterdam, has, in recent history, been known for its marijuana culture. But now, the birthplace of the world’s first stock exchange and central bank, is becoming home to banks with an open mind about bitcoin.

Big banks in China and the US are avoiding bitcoin ventures, although some of hinted otherwise. Dutch banks, contrarily, are embracing bitcoiners as potential customers. National regulators are not cracking down on bitcoiners like in other nations and bitcoiners are noticing. Major bitcoin startups from around the world are setting up shop in Amsterdam.

For those interested in the history of central banking, the Netherlands’ interest in bitcoin is underscored by that it is home to the world’s first central bank – the Bank of Amsterdam. Found in 1609, the bank was the first public bank to offer accounts not directly convertible to coin as a response to the chaotic economic environment of the time.

According to Mark Buitenhek, ING Groep NV (INGA)’s global head of transaction services, “customers want change, and that change could be bitcoin.”

“We are very expressly looking at what it is, what it can do and, mostly, what the message behind it is,” Buitenhek said at a conference. “And that tells us: Banks, take action.” ING is the Netherland’s largest bank by total assets.

Dutch regulators, like many nation-states, have warned about the risks of using bitcoins. But the authorities in the Netherlands have also looked into the crypto-currencies potential.


“They are willing to let this technological experiment unfold,” Jeroen Blokland said in an interview. At the same time, authorities are warning anyone who wants to use it as an investment to “be careful, be very careful.”

Bitcoin businesses are choosing Amsterdam over Europe’s more traditional tech hot spots like London and Berlin. BitPay, based in Atlanta, Georgia, has opened an office in the Netherlands, while BitFury, a startup that manufactures equipment for the bitcoin network, plans on basing major operations in Netherlands as well.

The Netherlands is home to about 5 percent of all bitcoin “nodes” – a source of computing power for the network that authenticates transactions. This is not far behind rates for Germany, Britain, Canada and France, and is more than China. The original bitcoin client software – Bitcoin QT – has been downloaded in the Netherlands nearly 130,000 times, one of the highest rates in the world on a per-capita basis.

Kim Gunnik, a policy officer for innovation and cybersecurity at the Dutch central bank, said the regulator believes companies could “learn something from virtual currencies” like bitcoin.

“Technological innovations in the financial industry and in payment traffic can entail huge opportunities and large benefits for society,” Gunnink said.

The central bank downplayed the notions that bitcoin could replace legal tender – the euro –  in an official statement on virtual currencies on May 8.

ABN Amro is one bank that has taken the bitcoin community aboard. Paul Iske, head of the bank’s innovation center, said virtual currencies are “to some extent a Black Swan.”

“We’re not excluding them,” and the bank will assess each proposition separately, he said. “That’s the kind of bank we want to be.”

Bitcoin enthusiasts nonetheless face resistance in the Netherlands, as the country is already part of a European payment system, and banks power a popular and cheap online direct-debiting system.

“The Netherlands is among the absolute front runners,” ING’s Buitenhek said. “I think we will be and remain pioneers, just as bitcoin is rising very rapidly here compared to other countries.”

Bitcoin Boulevard

Amsterdam is even home to a “Bitcoin Boulevard.” That’s right. At 17:57 on March 20th – the start of spring in the Netherlands – all of the businesses along two canada-side streets in the city center began accepting bitcoin; that is, nine restaurants and one art gallery.

Unofficially the two streets running along the canal – Bierkade and Groenewegje – will also change their name to ‘Bitcoin Boulevard’.

Of the restaurants accepting bitcoin, one is a beer hall with more than 160 beers, one’s a cafe and one’s a vegetarian restaurant.  The M Restaurant will also be holding a daily bitcoin ‘happy hour’, when all guests paying with the digital currency receive a discount.

The street has celebrated two successful months.

Bitcoin is a harbor in the current global economic storm. People who learn about the technology will have an inside look at the future, and can live well by being on top of their stuff.

Justin O’Connell is the CEO of GoldSilverBitcoin, Head Researcher at Dollar Vigilante, author of  Bitcoinomics as well as a co-host at Our Very Own Special Show, a lifestyle podcast about music, news, life and other topics.

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