Bitcoin, a decentralized online currency, began the second round of revaluation this year in early July after its price has jumped to over US$460 from the original US$200 for every BTC. Exchange rates against the renminbi topped 2,700 yuan (US$443) at its peak, according to huobi.com, a site dedicated to bitcoin trading news.
Chinese women have played a critical role in the rally, accounting for 40% of VIP customers. VIPs are defined as traders with over 10 million yuan (US$1.6 million) in total transaction volume using the online currency, according to the report.
The rally, following a slow-growth period, has brought with it a rise in fraud and bankruptcy, as well as the involvement of international speculators. The risk of a market crash has investors wary over the unstable currency’s trends.
The current rally followed the previous rollercoaster ride, which carried the currency from US$13 to over US$250 before plummeting back to less than US$70. Many thought the currency had gone bust before the newest rally began.
Several thousand stores worldwide have accepted Bitcoin as a legitimate payment method and many websites have allowed for transactions in the virtual currency, including Mt Gox of Japan, BTC China and Okcoin of China, and BitStamp of Slovenia.
According to Genesis Block, a research center on digital currencies, China’s daily transaction volume of Bitcoin topped BTC$100,000 at the end of Oct. 2013. The volume represents 50% of the global market, making China the world’s largest Bitcoin market.
Investments in Bitcoin, remain risky. Transaction websites are susceptible to attacks by hackers and shutdowns imposed by regulators, as well as sudden bankruptcies of operators. In Oct. 2013, a popular Bitcoin trading site, GBL, shut down abruptly. The operator fled with the funds before most investors had an opportunity to withdraw their money from their accounts. Twenty million yuan (US$3.3 million) in investments from around 500 people vanished.
The losses incurred were especially large because of GBL’s use of leveraged transactions. When the case was reported to the police, the latter had no knowledge of the virtual currency, a problem complicated by the fact that GBL is registered in Hong Kong.