Five held over Bitcoin scams in China and Germany 4 December 2013 Last updated at 16:41 Suspected Bitcoin fraudsters have been taken into police custody in Germany and China. The German authorities say they arrested two people following an investigation into malware that generated the virtual currency by infecting its victims' PCs. Xinhua reports three people have been detained in China after a trading platform was shut without warning, cutting off investors from their funds. The cases do not appear to be related. The German Federal Criminal Police Office say one of its suspects was arrested in the southern state of Bavaria and the other in the northern region of Lower Saxony. How Bitcoin works Bitcoin is often referred to as a new kind of currency. But it may be best to think of its units being virtual tokens rather than physical coins or notes. However, like all currencies its value is determined by how much people are willing to exchange it for. To process Bitcoin transactions, a procedure called "mining" must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution. For each problem solved, one block of bitcoins is processed. In addition the miner is rewarded with new bitcoins. This provides an incentive for people to provide computer processing power to solve the problems. To compensate for the growing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady stream of about 3,600 new bitcoins a day. There are currently about 11 million bitcoins in existence. To receive a bitcoin a user must have a Bitcoin address - a string of 27-34 letters and numbers - which acts as a kind of virtual postbox to and from which the bitcoins are sent. Since there is no registry of these addresses, people can use them to protect their anonymity when making a transaction. These addresses are in turn stored in Bitcoin wallets which are used to manage savings. They operate like privately run bank accounts - with the proviso that if the data is lost, so are the bitcoins owned. It accuses them of being behind a botnet that allowed its operators to secretly use other people's computers to carry out "Bitcoin mining." The technique - which involves using processing power to solve complicated mathematical problems - is used to create a secure record of Bitcoin transactions. The incentive for the malware's creators to commit their crime was the fact that Bitcoin miners are rewarded for their help with new bitcoins generated as a side-effect of the process. The reward for each puzzle solved is currently 25 bitcoins, currently worth a total of $29,075 (£17,788). Bitcoin breached the $1,000 mark for the first time last week. The police say they are also investigating related cases of fraud, copyright violations and offences related to the distribution of pornography. Chinese detentions The Chinese case relates to the closure of GBL, an online Bitcoin exchange platform based in Hong Kong, launched in May. According to Xinhua, by the end of September it had 4,493 registered members, and a trading volume that made it the fourth biggest in the country. China's official news agency says that on 26 October the site shut operations, leaving a fake postal address as a contact. It adds that three suspects were subsequently apprehended in different locations on the mainland. The agency says that the amount of money involved is unclear. However, the Hong Kong Standard has previously reported that up to HK$31.8m (£2.5m) was at stake. Bitcoin gained fame in China after film star Jet Li's charity One Foundation received a donation in the currency in April to help the victims of an earthquake. In recent weeks there have been a series of articles highlighting its use as a way to circumvent restrictions on money transfers out of the mainland - a factor that analysts say has helped propel a surge in Bitcoin's value.