The Bank of England has issued warnings over cryptocurrency saying it could be ‘worthless’

A dire warning about bitcoin has been issued by The Bank of England which has said the cryptocurrency could soon be “worthless”.

Bitcoin owners have been told to prepare to lose everything, with the Bank of England warning the cryptocurrency could soon be “worthless”.

The bank detailed the risks for investors as bitcoin soared to almost $70,000 in value this year. It peaked in early November but has stabilised in recent weeks.

Bank of England deputy governor Sir Jon Cunliffe said the banking industry needed to be ready for the risks of the currency as it becomes more popular.

Bank of England: Bitcoin could become "worthless."#Bitcoin: sir... pic.twitter.com/VTy32LG9Ke

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“Their price can vary quite considerably and [bitcoins] could theoretically or practically drop to zero,” he told the BBC.

In an online post published on the bank’s website, it said major institutions should take a cautious approach to adopting crypto assets.

“Enhanced regulatory and law enforcement frameworks, both domestically and at a global level, are needed to influence developments in these fast-growing markets in order to manage risks, encourage sustainable innovation and maintain broader trust and integrity in the financial system,” it said.

Elon Musk says Tesla will start accepting dogecoin, sending shares in the cryptocurrency soaring by as much as 33 per cent.

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The bank in the UK has been lobbying for stricter regulations for the cryptocurrency.

In a separate blog post, a member of the bank’s staff wrote that bitcoin failed to fulfil many of the features required of a currency and that it risked being inherently volatile.

“The problem is that, unlike traditional forms of money, bitcoin isn’t used to price things other than itself,” Thomas Belsham, who works in the bank’s stakeholder and media engagement division, wrote.

“As bitcoiners themselves are fond of saying, ‘one bitcoin = one bitcoin’. But a tautology does not a currency make.”

He added, the scarcity of bitcoin – which has been capped at 21 million – was one of the main attractors for investors.

However, Mr Belsham added this feature “may even, ultimately, render bitcoin worthless”. There are about 19 million bitcoins currently in circulation.

“Simple game theory tells us that a process of backward induction should, really, at some point, induce the smart money to get out. And were that to happen, investors really should be prepared to lose everything. Eventually,” Mr Belsham said.