Virtual currency a bit overpriced for the real world

Bitcoins, a type of virtual currency, are gaining popularity and value, but mainly among speculative traders, report Wang Ying and Wu Yiyao from Shanghai

A residential project in Shanghai's Pudong New Area is accepting bitcoins from apartment buyers, taking the currency a step closer to acceptance in China.

Domestic online game developer Shanda Interactive Entertainment Ltd, the developer of the property project, announced on Oct 26 that homebuyers can use bitcoins.

Shanda anticipated that the project, in Zhangjiang near a high-tech industrial park, would attract many young, computer-savvy people. It bet that some of these workers would be open to using a totally new kind of currency.

So far, though, no one has taken advantage of this novel form of payment. Perhaps because the cybercurrency has become so costly and hard to obtain, it's more likely to be traded by speculators than spent on real things.

Bitcoin - a distributed, peer-to-peer digital currency - was born in a paper published by Satoshi Nakamoto, which is assumed to be a pseudonym, in November 2008.

The virtual currency, believed to have been inspired by the culture of cyberpunk, has become the most popular among dozens of such imaginary monetary units.

As bitcoins can be "mined" only by solving extremely difficult cryptographic math problems, or bought from other owners, the currency avoids inflation risks.

"Many young people were excited about the innovative way of paying for apartments, and promised to come and buy the next day.

"But no one showed up, maybe because the bitcoin's value has surged recently," said Wang Feilang, vice-president at Shanda Tiandi, a cultural property development arm under the Shanda Group.

Wang noted that in recent weeks, the bitcoin's value versus the Chinese currency has risen from 1,000 yuan ($164) to a peak of 4,500 yuan as of Wednesday.

Most apartments in the project have an area of 42 to 81 square meters and cost 23,000 yuan to 28,000 yuan per sq m, according to a salesman surnamed Shi.

He said that up to 90 percent of the 400 available apartments have been sold, and a few buyers said they would collect enough bitcoins to pay for the property. But none has done so yet.