‘Pyramid scheme’

Bitcoin tumbled by almost 18 per cent today to $11,000 — a four-week low — after reports that the governments of China and South Korea were looking to ban trading of cryptocurrencies.

South Korea’s finance minister Kim Dong-yeon had said in an interview that banning trading in digital currencies was ‘a live option’.

Kim told media: “There are no disagreements over regulating speculation,” such as using real-name accounts and levying taxes on cryptocurrency trading. Shutting down digital currency exchanges is “a live option but government ministries need to very seriously review it,” he added.

As part of its rolling clampdown on cryptocurrency trading, Chinese authorities are also planning to block domestic access to Chinese and offshore cryptocurrency platforms that allow centralised trading.Chinese regulators have already banned initial coin offerings (ICOs) and limited bitcoin mining.

Established in 2009 after the financial meltdown, Bitcoin is a digital currency that has no central bank or regulatory authority backing it up. The digital coins are stored in a digital wallet or on the cloud and can be used in transactions.

In a related news, former Wells Fargo Chairman and CEO Dick Kovacevich has told CNBC that he thinks that bitcoin is a scam: “I think it’s a pyramid scheme. It makes no sense. I’m just surprised it isn’t even lower.”

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