The recent spike in the price of Bitcoin may have been aided by the rise of a Russian Ponzi scheme in China. If so, it should be a reminder to those who believe a currency decentralization revolution is in the offing that Bitcoin largely remains a medium for illicit exchanges and that the revolution is nowhere in sight.
On Wednesday, Bitcoin reached $441, its record for a year. It was down to $389 on Thursday, but still up 63 percent since the beginning of October. For more than two years, most of the trading in the cryptocurrency has taken place in Chinese exchanges, in renminbi:
So it’s safe to say that the price spike probably has its origins in China. Indeed, trading volume surged to more than 3 billion yuan a day in late October, from less than 700 million yuan ($110 million) a month ago. On Wednesday, it reached 5 billion yuan ($787 million), compared with $300 million worth of dollar trades.
One theory is that Chinese investors are looking for new assets after the stock market bubble burst. That makes little sense: Volatile, relatively thinly traded