I set up my first personal offshore bank account back in 1998, with a UK-based bank in the Isle of Man.
A couple of years later, I set up an offshore corporation and related account with an Australian bank operating out of Vanuatu, through which I ran my online business.
Soon after 9/11, the USA went on a “rampage” against offshore banks, ostensibly because of money laundering and terrorist financing fears – and I was advised by my Vanuatu bank that they could no longer offer me their services – due to pressure from the US administration.
It’s all been downhill since then.
Over the past several years the US has placed onerous reporting requirements on foreign banks to disclose the existence of bank accounts held by US citizens/residents. And as a result of such, most offshore banks have simply refused to open accounts for Americans.
But it’s not only Americans who are now affected. With the global economic downturn and the fact that Western governments are massively indebted and strapped for cash, most of them are looking for ways to shore up their tax revenues and stop capital flight. As a result, offshore bank accounts continue to be targeted.
Back in the “good old days”, prior to 9/11, there were considerable advantages to be had by using an offshore bank account. But these days the only real advantage is as a place outside your home country to keep your savings – as protection against possible confiscation in the future. Mind you, that is still a worthwhile objective.
Offshore banking is still legal, but it has lost a lot of its shine and appeal to ordinary folks looking for a way to protect themselves against predatory governments.
However, it appears the super-wealthy aren’t affected much by all this, as it was reported (a year ago) that up to $32 trillion dollars was stashed away by the world’s super-rich.
Of course, such people – which often includes leading political figures – can always find ways to hide their money. But for your average person it’s a much harder proposition.
Bitcoin is many things, depending on who you talk to, but in the light of the above it is also a very effective alternative to offshore banking for the non-wealthy – an easy way to protect (and even grow) one’s savings in a way that completely sidesteps most offshore banking controls.
You can download a Bitcoin wallet and fund it without anyone’s permission and without the necessity of providing any form of ID – if you do it person-to-person. And even if you use an exchange service to acquire your Bitcoins (which do require ID and proof of address) once such coins are in your own wallet they are completely within your control and cannot be seized.
Banks, as intermediaries, can be bullied and controlled by governments and represent a significant risk to your cash. But with Bitcoin you sidestep banks entirely and retain full control of your money. And not only in one country, but the entire world.
With Bitcoin you can decide to leave the country and take all your money with you, regardless of capital controls. And that’s a massive incentive to make use of this nascent technology – an advantage even the wealthy will start to take notice of.
If you’re unfamiliar with Bitcoin and would like to get to grips with the basics, then I have written a 10 page primer which will get you up to speed. You can download it for free from the link below:
Bitcoin: The Money Revolution
Addendum: It’s a fascinating subject for speculation, but if even only a tiny fraction of the funds currently held in offshore bank accounts were “relocated” into Bitcoin, then it would have a massive effect on Bitcoin’s price – upwards.
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