Developing markets turning to Bitcoin are experiencing huge variations in the price of buying a Bitcoin - and rumors of ulterior motives are beginning to surface.
In India, heavy demand on sites such as LocalBitcoins means that buy spreads have widened considerably, with users paying over $100 more per coin than in places such as the U.S. and Europe.
African red herrings?
However, while Indians increasingly turn to Bitcoin to safeguard themselves against financial uncertainty, in Nigeria, all may not be what it seems.
Suspicion is growing about the inflated price of Bitcoin on LocalBitcoins Nigeria, where prices start at the equivalent of around $1200.
“Bitcoin in Nigeria has experienced a rapid surge in pricing characterized by high trading volumes on the Nigerian exchange, BitX,” Zimbabwean publication TechZim reports.
Not just fiat fright
The resource goes on to postulate that the volume increases are mainly the result of Ponzi scheme users wanting to get on board, specifically those of MMM.
“My evidence for this theory are the parallels between what is now happening with MMM Nigeria and what I observed during the rise and fall of MMM Zimbabwe,” author William Suk continues.
MMM is a notorious global Ponzi scheme of Russian origin, first appearing in the late 1990’s. Its creator, Sergey Mavrodi, previously served jail time for fraud. Recently, the scheme has reappeared in several African countries, most recently in Kenya.
At the same time, Nigeria’s currency, the Naira, is under considerable pressure as its exchange value crumbles.
By comparison, in Zimbabwe itself, where a new currency was launched by Robert Mugabe this week, Bitcoin trading is comparatively stable - but prices still vary, these still denominated in USD.
Meanwhile, Pakistan appears to be following India’s sudden uptake over the border, with prices on LocalBitcoins also surging. A user looking to buy a coin for rupees can expect to pay around $790, roughly $55 more than global rates.
India’s politicians previously made statements suggesting their cash crackdown would have a negative effect on Pakistan.
“Fake Indian currency notes are printed in Pakistan and circulated in the country to destroy its economy,” India’s Union Home Minister Rajnath Singh said, adding that the move had got Pakistan “worried.”