Behind China's love affair with bitcoin
At the Garage café in Beijing's version of Silicon Valley, investor Chandler Guo is closely monitoring the price of his favorite investment: the bitcoin. The 30-year-old says he owns a thousand of them and has been watching their value shrink all week.
"I hope everyone just calms down," he said. "A lot of overseas traders are looking at China. They see the price falling here so that affects the whole world."
Chinese investors are driving the price of the virtual currency worldwide. Bitcoin is a popular way to invest in the country as people have few investment options and see it as a coveted commodity.
(Read more: Bitcoin price halves as China clampdown escalates)
This week the Chinese government unnerved bitcoin believers by stopping third-party payment systems from dealing in the digital currency. The move effectively makes it impossible for bitcoin exchanges in China to take in new yuan deposits—a key to driving prices higher.
Li Lin is waiting for the authorities' next move. Li is the CEO of Huobi.com, a bitcoin exchange that he founded just six months ago.
He minted souvenir bitcoins out of silver for his clients, believing bitcoins are just as valuable—if not more so—than precious metals. "Bitcoin is a strong competitor to gold," Li says. "It's virtual gold."
Li hopes the recent government clampdown on bitcoin trade is an attempt to cool off the euphoria—not a way to shut down trade altogether. "It's the equivalent of the government taking a credit card reader out of a restaurant," Li explains. "You can still pay, it's just a lot harder." Li say his firm's current trading volume is the equivalent of $50 million a day.
The authorities are wary of anything that could disrupt China's tightly controlled financial system.
(Read more: Bitcoin crashes 20% on China clampdown fears)
Back at the café for start-ups, which doubles as a den for bitcoin traders, Guo and other fans are not ready to give up on the digital money.
Despite recent volatility, Guo prefers the bitcoin because it helps him transfer money worldwide fast—a luxury Chinese have never had before due to the country's currency controls. "It's actually a financial network," Guo explains. "If you are in the U.S. and I'm in China, if I ask you to send me two bitcoins, you can transfer it right away. Two seconds. Done."
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He plans to keep buying bitcoins.
Li wouldn't be surprised. "Bitcoin is more trustworthy because its credit is based in science, not in an individual or a state," Li said.
—By CNBC's Eunice Yoon. Follow her on Twitter @eyoonCNBC.