Bitcoin Growing In Value, Popularity In China, But Investors Should Be Careful

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Bitcoin Online As Volume Of Transactions Grows
Chris Ratcliffe/Bloomberg via Getty Images
By Sophie Song

China now accounts for nearly a third of the daily bitcoin transactions in the world. The virtual currency's popularity in China has contributed to its shooting over $300 in value, but investors shouldn't be rash in buying bitcoins, experts said.

At the end of September, the number of bitcoins traded every day in the Chinese market was 17,500, up 24 percent from three months before and accounting for 30 percent of the world's total transaction, a report from Genesis Block, a New York-based digital currency research group, said recently.

The virtual currency has been gaining traction in China, but the latest surge in demand is widely seen as connected to the acceptance of bitcoins by Baidu Jiasule, a firewall service for websites co-developed by Baidu (BIDU), China's predominant search engine.

By the end of October, on BTC China, the largest Chinese bitcoin trading platform, the price of a bitcoin has grown to around 1,270 yuan (about $209 based on Friday's exchange rates) from 800 yuan early that month, Caixin, a Chinese financial news outlet, reported Thursday. Baidu's prominence led many to speculate that other Chinese companies could follow suit and accept bitcoins as payment.

"This is an extremely important moment," one investor said, if it leads to the acceptance of bitcoins in wider ranges of online payments.

In addition, it could be a marketing ploy Internet companies employ to advertise new products, said Liu Xiao, an analyst with public policy think tank Anbound Consulting.
Given that every payment for Jiasule only amounts to a small fraction of a bitcoin, the real impact on the market is negligible.

"Every time the bitcoin market boomed, it was driven by a stunt and not backed by real transactions," Liu said, according to Caixin.

Even so, the Chinese market has become an important driving force behind the virtual currency's increasingly wide use and may top all other similar currencies in terms of transaction volume, the Genesis Block report said.

There are nearly 20 bitcoin trading platforms in China, and investors say they are more prone to hacker attacks than platforms in developed countries. Chinese investors also face potential regulatory issues, since China has no law addressing the trade of bitcoins and their connection with the yuan and with the real economy.


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54 Comments

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mgundealer

I bought bitcoin @ $5.29 I only bought &200..00 worth , And sold them when it hit 274.00 ,I didnt do so bad. :)

November 16 2013 at 3:02 PM Report abuse rate up rate down Reply
T Rock

This age of electronics is nice for some things but what will you do when the power goes out? No phone no lights, no motorcars, not a single luxury ...

November 16 2013 at 12:39 PM Report abuse rate up rate down Reply
Heather Ann Czerniak

Looks like the Bitcoin is on its way to becoming the new global currency, replacing the euro and the US dollar. To be continued...

November 16 2013 at 11:35 AM Report abuse rate up rate down Reply
NAOMI

I just read another article about bitcoin and, personally, unless there is something of value to back this up, it is worthless. You cannot have a "coin" that is worth $400 in a certain location and worth $98 in another. Monies need to be backed up and I see nothing here that makes me feel safe using it as another form of currency.

November 16 2013 at 11:13 AM Report abuse rate up rate down Reply
jragga

i wouldn't buy anything that i could not hold in my hand.

November 10 2013 at 1:33 AM Report abuse rate up rate down Reply
chvemn

And the FEC is allowing them to be used to donate money to campaigns:

November 10 2013 at 12:51 AM Report abuse rate up rate down Reply
mark and sheri

Tulip Bulbs all over again. Look it up in history.

November 10 2013 at 12:19 AM Report abuse rate up rate down Reply
steves1709

I wouldn't trust a bitcoin's value any more than I'd trust Chinese dog food. Unless I really hated my dog...

November 10 2013 at 12:05 AM Report abuse rate up rate down Reply
safetyladyone

Bitcon starts with a B. Beanie Babies start with a B. Beanie Babies were suppposed to be a fantastic investment. Today you can hardly give them away.

November 09 2013 at 10:52 PM Report abuse +1 rate up rate down Reply
regular.joe1

the FREEMARKET will decide if bitcoin stays or goes and nothing else.
governments cant regulate bitcoin, only the free market can

November 09 2013 at 10:36 PM Report abuse -1 rate up rate down Reply