Bitcoin investors in China might have passed the most restless two nights of their lives as the virtual currency price rose from a little over 3,000 yuan (492.3 U.S. dollars) to nearly 7,000 and dropped back to 3,500 yuan from Tuesday to Wednesday on the country's biggest trading platform.
High investment risks have begun to concern them, despite huge returns.
Bitcoin, a form of digital e-money stored in a virtual wallet, bypasses banks, allows users to remain anonymous and came to the Chinese public eye in April this year, when movie star Jet Li's One Foundation received a donation of several hundred Bitcoin to help quake-stricken Sichuan.
The "currency" has been heating up ever since, especially when China Central Television reported on the evening news of October 28 that Canada has set up the first Bitcoin ATM machine. Investors went even crazier when the country's largest Bitcoin trading platform, BTC China, received an investment of 5 million U.S. dollars on Monday.
The platform's daily volume of business has exceeded 10,000 Bitcoin, or over 200 million yuan now.
While some applaud creativity and the revolutionary character of the "crypto-money," many consider it a new kind of investment. Only a few noticed the high risks behind the Bitcoin craze and drew back, as industry researchers and insiders, economists and sociologists looked on.
CURRENCY, DERIVATIVE OR BUBBLE?
"Bitcoin is hardly a revolutionary product," said Zhang Yuewen, associate researcher at the Institute of Finance and Banking, the Chinese Academy of Social Sciences.
Zhang said in essence, Bitcoin trading is no more than privately manufactured money circulating on the internet.
"Some communities issue vouchers for residents to use as a means of payment within the community, and the community for Bitcoin is the worldwide web," said Zhang.
Some economists share Zhang's opinion, thinking it is all too early to define Bitcoin as a new currency.