The biggest issue facing the bitcoin community is liquidity, according to one analyst.
In the latest edition of his podcast, Peter Schiff, co-founder of SchiffGold, said that the technology used to create digital tokens was not secure and would be hard for governments to control.
The crypto-currency is still young, but has attracted a lot of attention because of its low transaction fees and ability to be used in places such as banking and healthcare.
Mr Schiff also said that bitcoin was “probably going to be a bubble”.
“There are some of the best ideas in the world right now, but they’re going to need to be deployed in a way that protects people’s interests,” he said.
“And that is where bitcoin’s going to fail.”
Mr Schiff said the market would see “the most speculative bubbles in history” if governments did not control the supply of bitcoins.
“I don’t think there is any way that governments are going to stop bitcoin,” he told the podcast.
Bitcoin is not backed by any government, unlike other currencies, but its value is tied to the amount of bitcoins that are in circulation. “
So there is going to have to be some kind of system of regulation, and there’s going be some serious risk of this bubble bursting.”
Bitcoin is not backed by any government, unlike other currencies, but its value is tied to the amount of bitcoins that are in circulation.
The digital currency has risen to about $1,000, up from around $300 in mid-December, with some people buying tens of thousands of bitcoins a day.
The price has soared since then, reaching a record high of $3,250 last week.
The average bitcoin has risen by more than $2,000 since then.
“People are speculating about bitcoin in terms of its potential for money laundering, it’s potential for terrorist financing, and it’s possible for terrorist attacks,” Mr Schiff told the ABC.
“If you want to see some kind a bubble, then it’s going go up.”
Mr Paulson said in a recent speech that he did not believe bitcoin was a bubble.
“We’re going through a period of really big changes, and I think we need to get through it together and get on with our lives,” he wrote.
“The future of money is not going to change very much, and we’ll continue to be in this period of change.”
But some experts say the bitcoin bubble could be a warning sign.
Mr David Tuerck, director of the Global Futures Center at the University of Toronto, told the Australian Financial Review the digital currency “isn’t a bubble” and said that people should not buy in.
“A bubble is when you have bubbles in a financial market,” Mr Tuerk said.
What’s going on with bitcoin is that people are selling things that were bought for very little in the past, so they are buying things that are going up, which is a positive.”