NewsPublic Affairs / December 18, 2013

Already Down 50 Percent, Will Bitcoin Bite The Dust?

NPR
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Already Down 50 Percent, Will Bitcoin Bite The Dust?

Talk about a fall:

"Prices of virtual currency bitcoin fell 20% Wednesday and are now down more than 50% from their record high hit two weeks ago amid worries that China is moving to block the purchase and use of the currency by its citizens," The Wall Street Journal writes.

Bitcoin's big slide began two weeks ago, as we reported, when Chinese authorities told banks there that they couldn't trade in the currency. Officials were worried, NPR's Frank Langfitt reported, about a lack of control over bitcoins that "makes it easier to launder money and finance terrorism."

Wednesday, MarketWatch writes, "BTC China, the biggest bitcoin exchange in that country," announced it has "temporarily stopped" accepting yuan deposits into bitcoin accounts. The news followed reports that "the People's Bank of China had a meeting on Monday with about 10 major third-party payment processors and ordered them to stop working with bitcoin exchanges."

The result: "On Wednesday, bitcoin prices fell another 20 percent to $550.02, down more than 50% from its high of $1,147.25 two weeks ago," the Journal says.

And according to MarketWatch, "some in the Twittersphere [are] reading the last rites for the virtual currency that has captured the world's attention."

At Slate, economics correspondent Matthew Yglesias writes about why so many Chinese have been eager to use bitcoin: "The ability of Yuan-rich savers to turn their money into dollars or other foreign currency is sharply circumscribed. ... By using a Bitcoin exchange as an intermediary, a Chinese person could sell Yuan and a non-Chinese person could buy them."

But, he concludes, "as of this morning it looks like party is over."

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