The value of the digital currency has skyrocketed 1400 per cent within the last 18 months as it gains popularity among buyers who are happy to take a few risks.

Young speculative investors are piling into the currency and more shops around Australia are agreeing to receive bitcoin payments as it becomes accepted within society.

A single bitcoin can be separated into a hundred million segments, meaning users can still buy cheap items with the currency despite the immense value of a solo coin.

Despite this growing popularity economists and bankers are questioning the health of the bitcoin ecosystem on a daily basis, with many believing the currency’s rapid growth is setting itself up for a massive collapse.

Independent economist Clifford Bennett told Saturday Extra he believes the bitcoin boom is similar to the famous tulipmania craze in the Netherlands in the 17th century, where tulip bulb prices soared to astronomical levels before collapsing in 1637

“A single bulb became so valuable in this particular frenzy, that it surpassed even that of a house at the time,” he said.

Mr Bennett said when the market realised that tulip bulbs weren’t really worth the high prices people were paying for them, there was a collapse.

“Prices quickly went to zero and the Netherlands suffered a severe and lasting depression due to the instantaneous nature of such a tremendous loss of wealth. Let’s hope bitcoin is not leading the world down the same path.”

JPMorgan Chase chief executive Jamie Dimon also likened bitcoin to tulipmania, saying in September that the virtual currency is a “fraud” and people who buy bitcoins are “stupid”.

“If you’re stupid enough to buy [bitcoin], you’ll pay the price for it one day,” he said at an investor conference.

“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.”

Despite these strong comments denouncing bitcoin, Mr Dimon has instructed his bank — which is the largest bank in the US — to invest in blockchain technology, which forms the backbone of every bitcoin transaction.

Similarly, financial technology firm R3 along with 22 of the world’s largest banks — including the Commonwealth Bank of Australia — are investing heavily in blockchain and are in the process of developing an international payments system that will allow regular transactions to occur and be recorded via a blockchain.

Governments are also taking an interest in crypto currencies, with China banning all virtual currencies in September and clamping down on bitcoin exchanges which allow users to exchange Yuan for bitcoins.

Earlier this week Vietnam also cracked down on the payments system, banning bitcoin along with all other cryptocurrencies in the communist state.

But there are plenty of crypto currency bulls in the market too, including stockmarket tipster Callum Newman, who edits the website Daily Reckoning Australia.

Mr Newman tracked the price increases of 12 crypto currencies on August 28 this year and compared them to the biggest stock gains on the Australian sharemarket, finding the best return from the ASX was 8.93 per cent, while the biggest gain from a small cap cryptocurrency was an incredible 1,210 per cent.

“There were 12 cryptocurrencies that went up more than 100 per cent on this day,” he wrote in a note to investors

“Ask yourself … Where else can you find profit opportunities like this?”

Young Aussies are starting to take notice and buy bitcoins, with a recent survey released this week by bitcoin exchange bitcoin.com.au finding that 63 per cent of Aussie bitcoin users are under age 34. The survey revealed that 63 per cent of bitcoin owners bought bitcoin as an investment and 69 per cent of investors owned less than one bitcoin.

Australians are also adopting other crypto currencies which are competing with bitcoin, including Ethererum, Litecoin, Dogecoin, Dash and Monero.

According to tracking website Coinmarketcap.com, the total value of all crypto currencies in existence is $US192 billion ($249 billion), with Bitcoin comprising $US117 billion, and second placed Ethereum $US27 billion.

Macquarie University physicist Associate Professor Gavin Brennen says securing these crypto currencies from cyber criminals using quantum computers will be a huge challenge for crypto currency exchanges.

“There is a lot of nervousness in cryptocurrency communities about whether their digital assets will resist future attacks by very fast quantum computers,” Mr Brennan said.

He has just released a white paper which predicts that within 10 years quantum computers will be powerful enough to crack the bitcoin system — which could have a disastrous effect on cryptocurrencies as thieves could easily steal funds without detection, thus leading to a quick erosion of trust in the markets.

“Our service is providing advice and algorithmic protocols to digital currencies and blockchains … who want to certify their product will be quantum safe,” Mr Brennan said.

WHAT’S IT MEAN?

What is a cryptocurrency?

Cryptocurrencies are a form of digital currency and electronic payment system that is decentralised, meaning that no single institution or government controls the network. These virtual currencies can be used to buy goods on both the internet and at certain retail outlets.

What is Bitcoin?

Bitcoin is the first decentralised crypto-currency, created in 2009 by an inventor using the alias Satoshi Nakamoto. The peer-to-peer transaction system takes place without the need for an intermediary such as a bank or financial institution. Verified bitcoin transactions are recorded in a publicly distributed ledger called a blockchain.

What is a blockchain?

A blockchain is a continuously growing list of records, called blocks, which are linked together with a timestamp. Blockchains are a secure way to provide a public record of every transaction that has happened within that respective network.

What is bitcoin mining?

Mining refers to using a computer to analyse bitcoin transactions to verify the blockchain is consistent, complete and unalterable. For a newly created block in the chain to be accepted by the network, it must contain a proof-of-work. The difficulty level of verifying a new block is constantly increasing, demanding a significant amount of computing power to create a single block. Bitcoin miners are paid with bitcoins for cracking a code and verifying a new block.

What is ethereum?

Ethereum is the world’s second most popular form of crypto-currency after bitcoin. It was invented by 23-year-old Russian computer programmer Vitalik Buterin. People use the currency trade tokens called ether, which are transferred between accounts and recorded in a blockchain ledger similar to bitcoin.

PUZZLE OVER CREATOR’S ID

Who is Satoshi Nakamoto?

Satoshi Nakamoto is the pseudonym adopted by the person or group of people who created the bitcoin in 2009. In October 2008 Nakamoto published a research paper on a crypto-currency website, explaining how the virtual currency bitcoin would operate, before releasing bitcoin Version 0.1 as open source software on January 9, 2009. Nakamoto is believed to be in possession of roughly one million bitcoins, which are worth about $9 billion. Nakamoto posted on internet forums for several years discussing bitcoin before disappearing in 2012.

Since the disappearance several people in the computer world have been “identified” as Nakamoto, including blogger Nick Szabo, physicist Darian Nakamoto, cryptocurrency enthusiast Hal Finney and Australian Craig Steven Wright.

All of these people have denied that they are actually Nakamoto.

Cryptocurrency devotees know the only way for someone to prove they are Nakamoto is to show the world the access keys to the first bitcoins ever mined by Nakamoto, which are now worth $9 billion.

Who is Craig Steven Wright?

Craig Wright is an Australian computer scientist who was outed as Nakamoto by two online computer magazines in December 2015. Shortly after publication the Australian Federal Police raided Mr Wright’s rental property in Gordon and business premises in Ryde as part of an unrelated tax investigation, adding further mystery to the bitcoin universe.

Several months later, in May 2016, Wright claimed he was the creator of bitcoin by showing two journalists in London a private password key used by Nakamoto in 2009, but this was proved to be a scam by bitcoin experts. Wright then built a self-promotional website and hired a media agency to manage his publicity and arranged to host a global press conference in early May to show the world “a series of pieces that will lay the foundations for this extraordinary claim”. But several days before the evidence was set to be released Wright shut down the website, leaving just a single page showing a blog post titled “I’m sorry”. “I believed that I could put the years of anonymity and hiding behind me. But, as the events of this week unfolded and I prepared to publish the proof of access to the earliest keys, I broke. I do not have the courage. I cannot,” he wrote. Wright remained out of the public eye until the middle of this year, when he emerged as the chief scientist of bitcoin research company nChain. He is known for tweeting about bitcoin and speaking at conferences while wearing sunglasses indoors.