Demand for bitcoin has been particularly strong in China, where investors have eagerly embraced the currency and helped drive its price to dramatic new highs above $1,000 in recent weeks.Following the central bank's announcement, prices on the largest Bitcoin exchange in China plummeted by more than 20% before mounting a mild comeback.While the central bank did not outlaw or prohibit individuals from owning bitcoin, the guidelines specify that it is not to be considered a currency.The new rules prohibit financial institutions in China from trading, underwriting or offering insurance in bitcoin.In addition, websites in China that provide trading services are required to report investors' identities to regulators and take steps to prohibit money laundering.Related: China feeds bitcoin frenzy Despite its recent popularity, banks in China have largely avoided the currency.But Baidu, the leading search engine in China, accepts the currency for certain services.Internet retailer Alibaba has also experimented with bitcoin.

This is not the first time that Beijing has moved to place restrictions on an alternative currency.The central bank also took a dim view of the QQ coin, a popular virtual currency created by tech pioneer Tencent.The government restricted its use to virtual products in 2009.Related: What is Bitcoin?Bitcoin has surged this year on hopes the experiment in digital money will eventually become a legitimate global currency.One bitcoin was worth about $13 in January.The currency, which trades non-stop on the Mt.Gox exchange and other online markets, has been extremely volatile and swings of $100 or more in just a few minutes are common.In the United States, lawmakers have been examining potential regulations for Bitcoin, which is the currency of choice on certain online markets for drugs and other illicit goods.Bitcoin has received a measure of support from officials at the Federal Reserve, including chairman Ben Bernanke, who said the currency "may hold long-term promise" as part of the international payment system.

Related: Ron Paul says Bitcoin could 'destroy the dollar' Some supporters say government regulation would be a positive for Bitcoin, since it could lead to wider adoption of the currency.bitcoin paper wallet spendingBut others argue that Bitcoin is decentralized by design and the government should leave well alone.trade bitcoin dogecoinThe program behind Bitcoin was created anonymously and introduced on the internet in 2010.wwdc bitcoinUnlike traditional paper currencies, bitcoins are not managed by a central authority and exist only in cyberspace.bitcoin core old walletBitcoins are "mined" by powerful computers that complete complex math problems.bitcoin core create wallet

The total quantity of bitcoin is capped at 21 million, and more than 12 million are currently in circulation.bitcoin is the mark of the beastQuickTake: Bitcoin and the Blockchain Bitcoin extended Friday’s tumble amid concern China will tighten rules on the digital currency to curb capital outflows.The cryptocurrency slid 1.4 percent to $888 at 5:43 p.m.bitcoin hoy usdin Hong Kong, after falling as much as 10 percent on Friday.bitcoin dice roll to conduct self-checks and rectify any problems.china bans banks from bitcoin transactions reported.Bitcoin rallied since early 2015 as Chinese buyers turned to alternative assets to hedge against the weakening yuan and take cash out of the nation.

By buying bitcoin onshore and selling it offshore for another currency, investors can evade the tightening scrutiny on fund outflows.Other than a ban on financial institutions’ involvement, Chinese regulators had largely taken a hands-off approach on the cryptocurrency.“Bitcoin is one of the rocks they haven’t turned yet in terms of controlling the flows,” said Zennon Kapron, managing director of Shanghai-based consulting firm Kapronasia.“It’s inevitable that there’s going to be something but the question is what the regulations will be when it happens.”This is not the first time China’s government has sent bitcoin tumbling.In 2013, it banned financial institutions from handling bitcoin transactions, sparking a slide in price.The PBOC reiterated that stance in Friday’s statement, saying that bitcoin is a virtual commodity without the legal status of a currency.It characterized recent bitcoin moves as “unusual.”Bitcoin has become increasingly volatile since rallying to a record-high $1,162 on Thursday, slumping 11 percent that day after the yuan jumped.

In December it surged 28 percent.For a Gadfly Take on Bitcoin, Click HerePolicy makers are likely to require more reporting from bitcoin exchanges and incorporate their flows into the monitoring of the $50,000 quota Chinese citizens are given to convert yuan to foreign exchange -- though it will be more challenging to do so with the decentralized cryptocurrency, said Kapron., one of the most active Chinese exchanges -- said in a statement on its website that it works closely with the PBOC to ensure that it’s operating in accordance with Chinese laws.Huobi, another major Chinese platform, will also conduct strict self-checks as required by regulators and it plans to work with other bitcoin firms to establish industry standards, chief operating officer Zhu Jiawei said in a message.The industry can benefit from balanced, risk-based regulation, Star Xu, chief executive officer of OkCoin Co., said in an e-mail.The PBOC’s Beijing and Shanghai branches met with representatives of major bitcoin exchanges, including OkCoin, on Friday to discuss their operations, he said.“The policy risks of bitcoin trading in China are higher” because the nation has capital controls, said Dong Dengxin, director of Finance and Securities Research Institution at Wuhan University of Science and Technology.