Nine months after the global pyramid scheme MMM collapsed in Nigeria, it announced on its Facebook site that it would introduce a new cyber-currency linked to Bitcoin called the Mavro-BTC. Bitcoin, which is known as a cryptocurrency, is not regulated by any bank. Transactions take place between individuals without an intermediary. MMM describes itself as a “mutual aid network,” whereby participants become eligible to receive financial support by donating funds to others. This kind of practice is familiar to many people in the developing world, who frequently participate in informal savings groups with people they trust in lieu of traditional bank loans. This may be why MMM has gained so much traction in churches and other community groups, where people enjoy a high degree of social trust.
While MMM accepts local currency, it strongly encourages participants to donate to the network using Bitcoin. The benefits for them are obvious: it is much more difficult for governments to track and freeze cash flows coming in and out of MMM if they are not passing through the formal banking system. After countries like South Africa and Nigeria attempted to shut them down in 2016, they paused their operations, only to return at the beginning of 2017 with a new marketing focus: Bitcoin.
Today MMM offers bonuses and higher interest rates for contributions made in the cryptocurrency. For those who might find it daunting to set-up a Bitcoin wallet, they provide step-by-step documentation, suggesting that “you can start using Bitcoins even if you don’t know all the technical details.” In many ways, they have provided one of the most consumer-friendly support services for new users of the cryptocurrency.
The scheme has been controversial around Africa and other parts of the world because like most Ponzi schemes, the lending chain eventually collapses and thousands of people can lose money. It’s a scenario the Nigerian government would be keen to avoid, but given the tough economic conditions in the country, many participants are willing to take the risk.