Former Federal Reserve Chairman Alan Greenspan has hit out at the virtual currency describing it as a "bubble" in a television interview.
"You really have to stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven't been able to do it.
"But if you ask me, 'Is this a bubble in Bitcoin?' 'Yeah, it's a bubble," Greenspan told Bloomberg television.
The former Fed chairman said that investors would not question the intrinsic value of gold and traditional currencies or "where the money came from".
When asked if Bitcoin is the new gold, Greenspan laughed out loud.
The comments come as Beijing regulators announced plans to ban Chinese financial institutions from using the virtual currency for any kind of transactions.
The country's regulators said Bitcoin does not possess the attributes of a currency and cannot be allowed to circulate in the market as such.
The value of Bitcoin has soared in recent months, hitting the $1,200 mark, a 5000 per cent increase this year, as enthusiasm for the virtual currency grows on prospects that it could become a legitimate form of payment in the near future.
However, the online currency has also under fire over allegations that it is used to launder money, pay for illicit services as well as purchasing drugs and weapons.
Watch Greenspan in the video below: