The value of the bitcoin cryptocurrency has dropped below $690 per unit on one of the world’s biggest exchanges Mt. Gox, after the Japanese trader temporarily stopped withdrawals to fix technical problems.

"In our efforts to resolve the issue being encountered by various bitcoin withdrawals, it was determined that the increase in the flow of withdrawal requests has hindered our efforts on a technical level. To understand the issue thoroughly, the system needs to be in a static state," according to a statementreleased Friday, February 7.

“In order for our team to resolve the withdrawal issue it is necessary for a temporarily pause on all withdrawal requests to obtain a clear technical view of the current processes,” the MT Gox team said, promising to provide an update for their customers on Monday, February 10.

Friday’s plunge is more evidence of bitcoin volatility. Its value went above $1,000 in January and fell to below $690 on Friday's announcement, recovering to $730 in about an hour.

Central banks across the globe have begun to crackdown on the cryptocurrency, instructing financial institutions not to accept bitcoins because they have no legal status or monetary backing, like state-backed currencies.

Crackdown

The Russian Central Bank issued a ban on the virtual currency as they see it as a tool for criminals and terrorists to launder money without leaving a trace, as transactions are anonymous. On February 7, the Prosecutor’s General ruled bitcoin cannot be used by Russian citizens or companies.

At first a popular gimmick, many businesses attracted attention by accepting bitcoin. Now, many companies are reversing their decision. Online dating, coffee, and sandwiches are fair bitcoin tender, but companies are cutting back their bitcoin wallet functions. On Wednesday, Apple removed its bitcoin wallet application from its IOS store.

Though a popular internet and blog subject, in practice, most people haven't heard of, or ever plan to use bitcoin. A survey conducted by GFK research company for The Street found that out of those polled, more than three quarters had never heard of the controversial currency.

Bitcoin ownership is low - according to a study by BusinessInsider, less than 1000 people own 50 percent of the currency which is “mined” from logarithms. An overwhelming 80 percent majority of people polled by The Street, said they wanted nothing to do with the currency, preferring more traditional investments, like gold. Over 12 million bitcoins are believed to be in circulation, worldwide.

Bitcoin Foundation Vice Chairman Charlie Shrem (Reuters / Lucas Jackson)

Bitcoin ‘revolution’?

The 24-year-old bitcoin millionaire Charlie Shrem, arrested in January for using bitcoin for trafficking narcotics on the Silk Road website, told the Wall Street Journal, said 2014 will be explosive for the currency, which is fighting for legitimacy in financial circles.

"2014 will be like the Industrial Revolution for Bitcoin,” Shrem said, adding the founder, who goes by the alias Satoshi Nakamoto is “like Columbus - he gave us the new world” drawing comparisons to the man who invested currency that is and the explorer who discovered America.

“Now we have to build the bridges, roads, tunnels, synagogues and churches," Shrem said.

Shrem, who was arrested on January 26 at a New York airport for trying to sell $1m in bitcoin to a Silk Road user for contraband items such as guns and drugs, faces a sentence of up to 25 years for money laundering and a 5-year sentence for failing to report suspicious activity.

Before his arrest, Shrem was the CEO of the New York bitcoin service BitInstant, which suspended operations in July. Tyler and Cameron Winklevoss are big advocates of bitcoin, and invested $1.5 million in the firm, but have cut public ties with Shrem. The twins, known for their legal battles with Mark Zuckerberg over Facebook, have also filed an SEC request to set up their own exchange.

Shrem hopes the currency will survive the tough criticism, and in 2014 will become more accepted in financial circles, even mainstream.

“You don't know how every nut and bolt works on a car, but you can still drive," he said.

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