Bitcoin - live updates: Price levels off after big falls but bubble fears persist

The cryptocurrency has now surged more than 12-fold this year but some think it still has much further to go

Bitcoin's price has levelled off at around $9,600 on Friday after the cryptocurrency lost almost $2,000 in less than 24 hours over Wednesday and Thursday. Despite the falls, bitcoin is still trading at almost ten times its value at the start of the year.

Bank of France Governor Francois Villeroy de Galhau became the latest expert to warn that the cryptocurrency's stratospheric rise is a dangerous bubble, while other commentators say that Bitcoin still has much further to travel. Here's the latest bitcoin news:

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1 December - Bitcoin recovered to $10,600 on Friday after falling to $9,000 Thursday.

1 December - The US derivatives regulator said on Friday it would allow CME Group and CBOE Global Markets to list bitcoin futures, after the rival bourses were able to show their proposed contracts and trading arrangements met the necessary regulatory requirements.

The announcement by the Commodity Futures Trading Commission (CFTC) paves the way for CME and CBOE to become the first traditional US regulated exchanges to launch trading in bitcoin-related financial contracts, in a watershed moment for the cryptocurrency that should lead to greater regulatory scrutiny.

Trading in the CME and CBOE bitcoin futures contracts, which will be priced against and settled in the cash bitcoin market, should begin by year end, a CFTC official said.

1 December - Many things could pop bitcoin's bubble and hurt investors, skeptics say. Rival digital currencies, crackdowns from regulators, hacks and short-selling are among the most commonly-cited reasons that could cause bitcoin's demise.

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1 December - “We need to be clear: bitcoin is in no way a currency, or even a cryptocurrency,” France's central bank governor, Francois Villeroy de Galhau warned on Friday after recent volatile trading.

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30 November - Bitcoin fell as low as $9,000 after losing more than a fifth of its value having hit an all-time high of $11,395 on Wednesday.

The cryptocurrency dropped 8 per cent amid a rollercoaster ride on Thursday to hit $9,000 - a fall of more than $2,000 in under 24 hours. In volatile trading, it then picked up to around $9,500.

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30 November - Searches for bitcoin exceeded searches for Trump in the past week, data from Google showed, even though Donald Trump has been prominent in the news this week.

30 November - The first car for sale only in Bitcoin is now available, according to Auto Trader. Investors have been looking for signs that bitcoin has moved into the mainstream, and that proof may have arrived in the unlikely form of a gold Rolls-Royce. The lucky buyer can have it for £117,000-worth of cryptocurrency.

30 November - Professional services giant PwC has announced that it accepted payment in bitcoin - its first ever digital-currency transaction - the Wall Street Journal reports.

30 November - Banks should speed up the introduction of instant payments, whereby money is received immediately and around the clock, to counter the allure of digital currencies such as Bitcoin, a European Central Bank director said on Thursday.

With Bitcoin zooming past $11,000, cryptocurrencies - which can be used for instant electronic payments - have gained prominence in the financial debate and some central banks such as Sweden’s are even considering the introduction of their own version of them.

Yves Mersch, a member of the ECB’s executive board, was dismissive of the digital tokens but he urged commercial banks to provide an alternative.

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30 November - Thousands of bitcoin traders could face tax investigations after a US court ruled that the Internal Revenue Service’s demand for information from bitcoin broker Coinbase isn’t overly intrusive.

Just 800 to 900 taxpayers reported bitcoin gains from 2013 to 2015 in a period when more than 14,000 Coinbase users either bought, sold, sent or received at least $20,000 worth of bitcoin. “Many Coinbase users may not be reporting their bitcoin gains,” US Magistrate Judge Jacqueline Scott Corley in San Francisco said.

30 November - Bitcoin's wild price movements continued on Thursday. The cryptocurrency slumped from a new record high of $11,342 to $9,295 in a matter of hours on Wednesday night, before quickly regaining much of the lost ground to trade as high as $10,787.99 in Asian trading hours on Thursday.

29 November - Bitcoin dropped almost $700 in a matter of minutes, falling from $11,365 to $10,686, according to the Coinbase exchange. It was trading tantalisingly below $11,000 at 17:15 GMT - that's still a 9 per cent gain in a single day.

Meanwhile, Hamish McRae warns investors that the bitcoin boom "will end in tears".

29 November - Nobel Prize-winning economist Joseph Stiglitz has become the latest economist to question the fundamentals behind the cryptocurrency's remarkable ascent.

On Wednesday he said that “bitcoin is successful only because of its potential for circumvention, lack of oversight".

“So it seems to me it ought to be outlawed,” Mr Stiglitz said in an interview on Bloomberg Television. “It doesn’t serve any socially useful function.”

It has now surged more than 12-fold as buyers shrugged off increased warnings that the largest digital currency is an asset bubble.

“It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down,” Mr Stiglitz added.

Earlier in the day bitcoin broke through the $11,000 barrier for the first time ever.

Michael Rauchs, a cryptocurrency expert at the University of Cambridge told The Independent that bitcoin technology is revolutionary and here to stay. “The system can act as a payment network that has no down time, it’s operating 24/7, it doesn’t care where and to whom you send money,” he said.

“I would put it in the same category of revolutionary new technologies like the internet,” he said.

“These world-changing systems tend to be accompanied by bubbles in their early stages. What’s happening now is completely normal.”

29 November - Investors flocking to bitcoinare taking a big risk by buying at current high prices, the Vice President of the European Central Bank Vitor Constancio told CNBC on Wednesday.

"It's a very particular asset, it's a speculative asset by definition looking to the developments in its price. Investors are taking that risk of buying at such high prices," Mr Constancio said.

29 November - Bitcoin isn’t big enough to pose a risk to the global economy, Bank of England deputy governor Jon Cunliffe said on Wednesday, as the cryptocurrency hit a record high of above $10,000 (£7,493) for the first time.

“I would just say investors kind of need to do their homework,” Mr Cunliffe told BBC Radio.

What is bitcoin?

Bitcoin is a digital currency created in 2009 by a mysterious figure using the alias Satoshi Nakamoto. It can be used to buy or sell items from people and companies that accept bitcoin as payment but it differs in several key ways from traditional currencies.

Most obviously, bitcoin doesn’t exist as a physical currency. There are no actual coins or notes. It exists only online.

“Real-world” currencies like the dollar are managed by a central bank such as the US Federal Reserve or the Bank of England which manage the money supply to keep prices steady. They can print more money or withdraw some from circulation if they think it’s needed.

Where does bitcoin come from?

Bitcoin has no central bank and isn’t linked to or regulated by any state. The supply of the cryptocurrency is decentralised - it can only be increased by a process known as “mining”. For each bitcoin transaction, a computer owned by a bitcoin “miner” must solve a difficult mathematical problem. The miner then receives a fraction of a bitcoin as a reward. The use of problem-solving in this way is the reason bitcoin is known as a cryptocurrency.

A record of each transaction, using anonymised strings of numbers to identify it, is stored on a huge public ledger known as a blockchain.