A currency for the future, or just a bubble?BEIJING, Dec 16 -- Bitcoin, the virtual currency, has created something of a frenzy inChina, with its value surging more than 80 percent in a year. Until last week, that is, whenit plunged more than 30 percent after the central bank banned financial institutions frominvolvement in bitcoin trading.
The majority of Chinese investors, who seem to love speculation, know little about themechanisms surrounding the currency. They can’t hold one in their hands nor use bitcoinin their normal daily lives.
Therefore, it seems like the right time to damp down the heated bitcoin trade in China,which had accounted for more than half of the currency’s global trading volume.
“It’s a game of speculation (in China), and few people know or care what’s behind it,” saidJames Li, head of BTC360.com, a bitcoin trading platform which he founded this year.
Bitcoin was introduced in 2008 by a programmer, or group of programmers, under thename of Satoshi Nakamoto. It was designed to become an alternative to government-backed currencies. There are 12.1 million bitcoins in virtual circulation, and their supply isstrictly governed by rules embedded in complicated software.
Most of the early bitcoin investors or collectors were geeks or financial experts. Even as anIT journalist, I can’t explain the mechanism of the virtual currency in a few sentences.
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