China

Bitcoin Mania Grips China

(Bloomberg Businessweek) Sun Minjie, a 28-year-old Internet worker who lives in Beijing, has invested more than $3,000 in 796 Xchange, a website where people buy and sell shares of companies that deal in bitcoins. The stock of 796 Xchange, which also deals in Bitcoin futures, returned about 57 percent from Aug. 1, when it started trading on the company’s website, through Sept. 3. The benchmark Shanghai Composite Index gained about 4.6 percent during the same period. “In China, the stock market, property, and bond market are all not so good, so people get really excited when they hear of a new investment that generates high returns,” says Peter Pak, head of trading at BOCI Securities in Hong Kong.

In May, China briefly overtook the U.S. in monthly creation of bitcoins, rising from seventh place in August last year. China now ranks second, according to SourceForge, a technology website that tracks Bitcoin activity worldwide. Created four years ago by a person or group using the name Satoshi Nakamoto, Bitcoin is a virtual currency that can be used to buy and sell a growing range of goods and services online — from cupcakes to electronics to illegal narcotics.

Computer users can “mine” bitcoins by solving mathematical puzzles — uncovering the hidden series of letters and numbers that matches up with security keys specified by the computer programmers who invented the currency. As more coins are mined, the puzzles get harder, and cracking them requires specialized computers. Sun gave up after a month, concluding that his computers weren’t up to the task. “Simple desktops can no longer dig them up,” he says.