At least 80 different kinds of virtual currencies have begun to mushroom even before regulators around the world started their crackdown on bitcoin.倉 These virtual currencies have attracted a host of local investors, said the founder of BitCashOut, Hong Kong's first bitcoin exchange platform. He points out that most of these virtual currencies are "bitcoin copycats," that replicate bitcoin's computer program, produce and market a new virtual currency and then get people to trade. "The clone process does not require professional expertise and it is quite simple," said an expert who did not want to reveal his name. The website CoinMarketCap.com lists 42 different types of virtual currencies, such as Litecoin, Peercoin, ProtoShares and others. Each of them has their own price, trading quantities and even their own "market capitalization." The newer virtual currencies are on a fast track to growth. Litecoin - one of the most popular - can be traded on mainland platforms, and Ripple is a new favorite in overseas markets for its "store-value concept," which means it has no currency value but only a credit amount. Ripple's value was speculated at more than US$770 (HK$6,006) per unit in one month from the US$200 per unit at the beginning of November. Some investors said their investment rose five- fold to 50,000 yuan (HK$63,885) on Ripple. BitCashOut said it has received requests from bitcoin clients who wanted more variety in virtual currencies. "They complain that Litecoin is already available in the mainland and they don't want to bother heading north. They want to trade in Hong Kong," BitCashOut founder said. "The number of players, or investors, decide the appreciation of the virtual currency," he said, introducing those who create new bitcoins as "miners." Miners typically download bitcoin production software system, which they will modify, and then issue a new currency with a new name. Similar to bitcoin, there are production limits on virtual currencies. Should investors recognize this aspect and hold on to them, the amount of bitcoins available in the market will be less and their value will eventually rise. "Investors hope that other e-currencies will sharply go up as bitcoin has done if more people are involved," he explains. While risks are high,mini storagethe returns from such an emerging asset class are easy. Industry experts are of the opinion that speculators account for more than half of the investors of virtual currencies and that the market is on the verge of a bubble-burst. 796 Exchange, another locally- based bitcoin trading platform, is bearish about cloned bitcoins, citing the investment as a gamble that is not sustainable. "Without support from trading platforms and those who are actual users, they will soon die out," said Chu Wing, chief executive of 796 Exchange. Bitcoin - the best-known digital e-currency which is stored in a virtual wallet - came to the public's attention in the mainland in April, when a charity fund led by Kung Fu star, Jet Li, announced that donations in bitcoin would be accepted. Wide interest has been triggered globally by a rising number of merchants who have come to recognize the e-currency as a method of making payment. At the end of August 2013, the value of all bitcoins in circulation exceeded US$1.5 billion with millions of dollars worth of bitcoins being exchanged daily Later, bitcoin became a hit investment class as its price began soaring in the past few months. From its debut price of US$0.03 per unit in 2010, bitcoin has been speculated to around US$1,168 in the last week of November - close to the price of gold at US$1,252 per ounce at that time. BTC China, the largest bitcoin exchange in the nation, now accounts for 62 percent of market volume across the globe, according to pricing webstore Bitcoin Average. Bitcoin is not regulated by any central bank, which means it can be freely traded between peer to peer, but it also can be illegally used as a platform for money laundering as information of the account holders cannot be tracked. With its value heading north, the virtual currency has come under the spotlight of the authorities. Early this month, the People's Bank of China banned the use of bitcoin by domestic financial institutions as the currency has no intrinsic value. After three people were arrested for bitcoin swindling, BTC China said it would no longer accept deposits in the Chinese currency. Overnight, bitcoin prices lost almost 50 percent on the news. Each bitcoin was traded at 3,311 yuan, or US$685 on December 19. grace.cao@singtaonewscorp.com 迷你倉
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