Some people may tell the price of Bitcoin differently, due to the price differences between their national exchange rates and the USD exchange rates. More generally, to mention the price of Bitcoin, we say that today, its price is approximately 58.500 USD.
Nevertheless, the value of the price of Bitcoin is different from country to country, so it gives people the possibility of arbitration. This is because different countries buy and sell Bitcoin at different prices because it does not have an international price that was accepted by all and it exists as a shared trust. This happens because people may not have agreed yet on what Bitcoin is.
The purpose of Bitcoin
Everyone has their own reasons why they buy Bitcoin. This happens because if you have a certain amount of money, you know that you will go buy something, invest in something or travel. However, you cannot use Bitcoin for any special purpose and that is why people keep buying Bitcoin for different reasons and purposes. Some of them even believe that the blockchain technology, on which Bitcoin is based, will one day flourish.
The main and most important reason in general is that people look forward to several years and think that they will use this innovation after several years in different circumstances, hoping to use it in everyday life. And last but not least, BTC is often bought in hopes of selling it at a much higher price a few days later.
The speculative nature of Bitcoin allows owners of BTC to sell it at a price that the buyer is willing to pay. It is more like selling an apartment, it does not have a given price, you set the price, which is worth it for you and if it is acceptable to the buyer, the deal is done. For example, in India, BTC is sold at a price 20% higher than the US market, and the difference between the buy and sell prices is 1000%. And why do people still buy it? Because they have no other option.
Bitcoin price differences: there is no standard
The discrepancy between the price of BTC can be explained by the fact that, as a decentralized digital currency, Bitcoin has no standard or global price. It is not guaranteed for USD or any other currency, as money is equivalent to gold. The main driver of the economy is the balance between supply and demand. Due to the fact that the demand for Bitcoin is different from country to country, the price range is also different from country to country.
Average price estimates
We cannot be sure that the price tracker in the case of Bitcoin is always accurate because they calculate the average based on recent transactions of major exchanges. For example, Google could use Coinbase, where the price of BTC could be different from other platforms.
In addition, people look up the price in their national currenciessuch as the South African rand or the Nigerian naira, plus fees and other variables.
Does the price change of BTC from one country to another give people the opportunity to arbitrate? Yes, and the case of Nigeria proves its validity.
In Nigeria, a Bitcoin can cost 68,000 USD. This means that the owner of BTC would get more nairas per dollar when converting their local currency. However, the purchase also becomes more expensive.
1 USD is approximately 380 Naira. The CEO of social payments app Bundle Africa said exchanges are more likely to use informal dollar rates and the local price of BTC will fluctuate. All this indicates that local Bitcoin markets exist outside of government rules, according to a professor at the University of Chicago, this means that there is manipulation of the nominal exchange rate.
Those circumstances created fertile ground for people living outside Nigeria and participating in online gambling. These people were changing their VPN address as if they were located in Nigeria. This has given them the opportunity to win Bitcoin gambling in the Nigeria-based BTC casinos, which they would withdraw for the local price, which is more than the world average. Apparently, it was even possible to transfer, for example, $ 1000 in BTC into a casino account, play a round or two so as not to be suspicious, and then withdraw $ 1270 as the price difference at the peak was 27%.
One of the main possible reasons for Bitcoin price differences from country to country could be the inflation.
Let's take Venezuela as an example. If a Venezuelan resident owns Bitcoin, it is quite anticipated that he will demand a higher price to have more profit compared to the currency of his country. Due to the fact that the inflation rate in Venezuela was 10 million% against the USD, people began to turn to Bitcoin en masse.
Inflation was one of the reasons we mentioned Nigeria as an example in the article. The demand for Bitcoin was so high that Nigeria's central bank was forced to close all accounts that were connected to cryptocurrency trading. After that, the demand for Bitcoin dropped.
It is not a coincidence that we mentioned developing countries as examples of big changes in the price of Bitcoin. Generally, those are the countries that have high inflation rates and it also affects the demand in the BTC.
Finally, in summary, everyone who is involved in the cryptocurrency industry has information about the differences in the price of BTC and some professionals even change their VPS address to be guaranteed more profit. Changes are usually caused by different exchange rates and the demands of a country's financial market.
As the price of Bitcoin is not yet officially on the international financial market, it can be sold at a price that someone is willing to pay. Price differences are usually high in developing countries, as we have mentioned in Nigeria or Venezuela, and one of the reasons is the high inflation rate in the country. Governments have taken steps to stop the massive demand for cryptocurrencies and as of now, the demand for Bitcoins has dropped.