December 19, 2013
Alistair Barr, and Kim Hjelmgaard
Bitcoin was supposed to be beyond the reach of governments, but investors in the virtual currency are realizing that is not the case.
The price of a Bitcoin slumped Wednesday after China's largest exchange for the virtual currency said it would stop accepting deposits in yuan — China's local currency.
The much-ballyhooed Bitcoin currency has lost more than half its value since hitting records above $1,100 at the end of November. On Wednesday, the price of a Bitcoin fell 18% to $558 and traded as low as $422.50 earlier in the day, according to an index run by CoinDesk, a website focused on digital currencies.
The exchange, BTC China, had to "temporarily stop its yuan account recharging functions," according to comments it made on Weibo, a popular Chinese micro-blogging service similar to Twitter.
"Bitcoin is inherently volatile, but the decision by this large exchange has played a role," said Tyler Moore, a Southern Methodist University assistant professor in computer science who has studied Bitcoin. "Stopping new deposits prevents new Chinese investors from piling more yuan into Bitcoin, eliminating some of the demand."
Bitcoin is a digital currency and payment method that is not regulated by any government. Instead, software controls how many Bitcoins are produced, leaving it less prone to the whims of central banks, some of which have caused inflation in the past by printing too much paper currency.
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