Sun and sky,beaches and coasts,it is hard for people to believe that such a beautiful place would be the seedbed of a disaster. Yet a disaster of finance there is, which spreads quickly.

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Cyprus is an island country which located in the Eastern Mediterranean sea, with Greece,Turkey,Syria, Lebanon, Israel, Gaza Strip and Egypt as its neighbours.

According to wikipedia, the history of Cyprus can be tracked back to 10,000 BC, and you may find that many events and stories in its history are related to its neighbours — mostly Greece and Turkey. Let's take a quick look at the modern and contemporary history of Cyprus.

In 1878, Cyprus was occupied by Britain, and it was under the rule of the British crown for 82 years.

In February 1959, Zürich and London Agreement was signed between United Kingdom, Greece and Turkey,which ensures the independence of Cyprus.

On 16 August 1960,the independence of Cyprus was proclaimed, and the coalition government was composed of the two communities — Greek and Turkish.

By the end of 1963, the two communities had conflict on constitutional issues, along with violence and blood.

Then followed the 'Turkish invasion and division', which lead the result of the current situation — that is —when we talk about Cyprus, we mean the Republic of Cyprus, which (quote from wikpedia) 'has de jure sovereignty over the island of Cyprus and its surrounding waters, except for the British Overseas Territory of Akrotiri and Dhekelia, administered as Sovereign Base Areas. However, the Republic of Cyprus is de facto partitioned into two main parts; the area under the effective control of the Republic, comprising about 59% of the island's area, and the Turkish-controlled area in the north, calling itself the Turkish Republic of Northern Cyprus and recognised only by Turkey, covering about 36% of the island's area. The international community considers the northern part of the island as occupied territory of the Republic of Cyprus by Turkish forces.'

On May 2004,The Republic of Cyprus joined the European Union, and on 1 January 2008,the Republic of Cyprus joined the Eurozone (which means since then Euro is the fiat money of Cyprus).

In short, when we talk about Cyprus, we're talking about its 'Greek Area' or 'Eurozone area'.

Because of its beautiful scenery, Cyprus has always been a major tourist destination in the Mediterranean.Further more, Cyprus is not only a Tourist Heaven, but also a Tax Heaven. It is said that many rich Russians have deposit accounts in Cyprus banks.With the high income of tourism and the benefit of foreign deposits,the economy is quit e good until recently.

Since Cyprus has many history origins with its neighbour Greece, they become economy partners. Greece is the largest export and import partner of Cyprus, and Cyprus holds a large number of Greek debts.

So when the European sovereign-debt crisis (which was commonly considered starting from Greece) began in 2009, Cyprus was deeply affected.In 2012, the credit rating of Cyprus was downgraded to 'junk'. As a member of European Union and Eurozone, the government requested 'help' from EU.

Help eventually came but with price. On 16 March 2013, the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) agreed a €10 billion deal with Cyprus. As part of the deal, a one-off levy was announced on all domestic bank accounts. Accounts with under €100,000 deposited must pay 6.75%, and those with more than €100,000 must pay 9.9%. Depositors were said to be compensated with shares in their banks (which seemed useless and worthless). When your fortune suddenly missing, that's what we call 'misfortune'.

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Of course this deal was unacceptable and insufferable for the Cypriot people, they protested strongly against it. The Russian government also criticized the levy.

On 19 March 2013, the deal was rejected by the Cypriot parliament.

On 22 March, the Cyprus Parliament approved a restructuring plan, its second-largest bank Laiki Bank to create a “bad bank” to deal the things. Later On 25 March, Cyprus President Anastasiades, Eurozone finance ministers, and IMF officials announced that EU will be provide 10 billion euros to the Bank of Cyprus in aid, deposits of less than €100,000 depositors will not suffer from the loss, the details of re-opening the Bank of Cyprus still need to discuss. But those account in Bank of Cyprus has more than €100,000 deposits should pay as heavy as 40% deposit tax, as part of the assistance agreement. And this bank has many accounts belong to those Russian large depositors.

And the whole agreement to include: 1.Recapitalisation of the entire financial sector while accepting a closure of the Laiki bank, 2.Implementation of the anti-money laundering framework in Cypriot financial institutions, 3.Fiscal consolidation to help bring down the Cypriot governmental budget deficit, 4.Structural reforms to restore competitiveness and macroeconomic imbalances, 5.Privatization programme.

The world is shocked. These series of events happened in Cyprus were never heard of. Bank is no longer a safe place for your money, the government can directly and nakedly rob you. People have to revise their sense of wealth.They have to seek for other ways to keep their fortune safe, especially for those people who have deposit accounts in Cyprus banks, and those people who have deposit accounts in banks of countries (Spain, for example) which may suffer similiar predicament like Cyprus.

Gold is one traditional ideal option for this situation. However it turns out that Wall Street can easily control the price of gold (in April 2013,补充), if you invest money on gold, you may have no benefit or even deficit.Further more, gold is not easy for keeping, transporting and spiltting, besides, as time goes by, gold would have an unstoppable nature loss. So people need something like gold, and better than gold.

Dramatically, in the same year when European sovereign-debt crisis began, the mystery 'Satoshi Nakamoto' announced Bitcoin — a digital currency based on an open source cryptographic protocol and P2P network.

(To be continued)

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