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The digital currency Bitcoin collapsed today in afternoon trading after rapid growth last weeks and new record set earlier in the day. Earlier today, the digital currency rose to 1,161 USD, but then lost over 20% of its value. The reasons for the strong demand at present market analysts indicate growing control over the movement of capital in China, as well as the failed monetary reforms in India and Venezuela. The Chinese government strengthen controls on capital flows as a measure against the depreciation of the yuan. Chinese investors circumvent controls using Bitcoin.

The today’s decrease happened amid large sales in China, growth of the Chinese yuan and liquidations of short positions by OKCoin. Combination of all the features, pushed by the closure of 10 million USD positions of OKCoin against the Bitcoin, which started the freefall of the crypto-currency. However Bitcoin stabilized around 950 USD in the later trading, compensating part from the sharp drop,

Bitcoin is a digital currency that is created through complex of computing processes on users’ computers. It is in circulation since 2009. Its fans argue that unlike traditional exchange currencies the Bitcoin is not subject to government control, but the payments are much more difficult to track. Opponents do fear that precisely because of the difficulty of tracking the currency can be used for criminal activities. They indicate the fluctuations of the rate recorded in recent years.

The abrupt changes in course make Bitcoin unsuitable means of payment and security problems given the risk of hacker attacks.

