Bitcoin, a digital currency that circulates on the internet and functions without the intermediation of a central authority, is losing its attraction for investors following a drop in its exchange rate against the renminbi over the past month.
The bitcoin trading platform FXBTC recently announced that it was halting renminbi transactions and other exchange operations, while another platform BTC38.com stated that it had received a notification from banks to suspend renminbi transactions.
According to data from China's largest bitcoin trading website BTC China, the exchange rate of the bitcoin against the renminbi slumped from 3,951 yuan (US$637) on March 4 to 2,419 yuan (US$390) on April 4, resulting in an approximate 40% slump, the Guangdong-based New Express newspaper reported.
Bitcoin's value once skyrocketed from 80 yuan (US$13) to 6,600 yuan (US$1,064) in 2013, an 80-fold growth, the newspaper said.
"Since last December, the exchange rate for bitcoin has fallen from 6,000 yuan (US$967) to below 2,500 yuan (US$403)," said Tian Zhong, a bitcoin investor, who works at a Beijing-based network company.
His 200,000 yuan (US$32,300), spent on bitcoin investments, had halved, Tian said.
Owing to bitcoin's popularity, other similar virtual currencies had been created in the Chinese market. Data from the Chinese currency webportal Jubi, which is devoted to the trading of virtual currencies, indicates that since January this year, 16 domestic virtual currencies have been issued.
On Feb. 2 and Feb. 3, the market saw the birth of three virtual currencies - penguincoin, elephantcoin and reddcoin - the New Express stated, warning that although technological innovation was an essential part of virtual currencies, the risk of investing in virtual currencies had risen.
Three factors were blamed for the risk, namely a lack of protection for capital safety, a lack of transparency in the issuing mechanism of virtual currencies, and inherent flaws in the laws that govern the circulation of virtual currencies, the newspaper said.
