Venezuela's President Nicolas Maduro says that the new currency will be called the "petro" and will be backed by the OPEC nation's abundant oil, gold and mineral reserves.
The cryptocurrency fell as much as eight percent on Thursday on the Luxembourg-based Bitstamp exchange to hit $9,000 exactly, marking a fall of well over $2,000 in under 24 hours.
The stratospheric rise of bitcoin in 2017 has focused attention on cryptocurrencies. Created in 2009, bitcoin uses encryption and blockchain technology to enable fast and anonymous funds' transfers outside of a traditional centralised payment system.
As the value of bitcoin and other cryptocurrencies continues to rise, whether the money pouring into digital currency is speculative or an investment is dominating discussion in the markets.
Bitcoin surged globally to a record high of $7,888 last week. But on Harare's bitcoin exchange, Golix, the price hit $13,900, a spectuacular 40-fold jump in the same period.
Bitcoin dropped to $6,800 on the Luxembourg-based Bitstamp exchange by 1200 GMT, before recovering a little to $6,870 just over 20 minutes later.
Digital currency Bitcoin reaches all-time high of more than $7000, rising from just $0.06 on its launch.
Venezuelans are increasingly adopting the cryptocurrency as an alternative unit of value to protect themselves from devaluation of the Bolivar.
Electronic currency Bitcoin reaches a historic high, its price jumping by eight percent in one night amid undaunted investor appetite.
JPMorgan Chief Executive Jamie Dimon has joined a long line of market commentators that have been critical of bitcoin and it potentially being in a bubble.
China has banned fundraising through initial coin offerings to put an end at investments that may include financial scams. The move has caused chaos among start-ups.
Soaring demand for the cryptocurrency has pushed it up by 45 percent since last Thursday and more than 180 percent for the year so far. A Bitcoin is now more than double the price of gold.
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