Speculating on bitcoin is no different to taking a punt on the price of gold, it has been suggested, as the demand for the cryptocurrency saw it break through the $10,000 (£7,458) a piece barrier.
Investors looking to ascribe an intrinsic value to the virtual currency have compared it to gold, as there is a finite amount of it and central banks cannot print more of it, meaning it has a scarcity value.
“Gold and Bitcoins are both scarce commodities – gold because of its chemistry and bitcoin by design. Both at present are attractive to some because they are hard to tax and regulate, which captures the anti-establishment sentiment at the moment," Peter Sleep, an investment manager at Seven Investment Management, said.
“Speculation is purchasing an asset in the hope of benefiting from short term fluctuations in an assets value. In those terms, bitcoin and gold fulfill the same role”, but he believed gold has other functions which it can perform functions other than speculation."
Mr Sleep acknowledged gold is superior as a store of value because it is easier to transport and can be more readily turned into cash than bitcoin. He also added gold would be accepted anywhere in the world, while that is not yet the case with bitcoin.
Earlier today the value of a bitcoin broke through the $10,000 (£7,458) barrier. At the start of 2017 each bitcoin was worth $1,000 (£745).
The cryptocurrency was launched in 2009 and currently has a market capitalisation of $171bn (£127bn).
In September the rapid rise in bitcoin's value led the vice-president of the European Central Bank Vitor Constancio to compare it to the "tulipmania" of the 17th century, generally considered the first speculative bubble.
Meanwhile Jamie Dimon, chief executive of JP Morgan has called the virtual currency a fraud and said those who invest in it are "stupid".
Kathleen Brooks, head of research at Forex.com said both gold and bitcoin can act as a store of value and neither pay a yield, so have similar characteristics.
She said despite the similar characteristics, bitcoin is performing better than gold because it is new and in vogue when compared with the precious metal.
Ms Brooks said the ability of bitcoin to offer protection for investors is untested in times of market downturns, while gold performed well during the financial crisis.
The Financial Conduct Authority and the European Securities and Markets Authority have recently warned about the increasing number of initial coin offerings, which are ways of raising money from investors using virtual coins or tokens such as bitcoin, where these are issued and put for sale in exchange for fiat money for other virtual currencies such as bitcoin or ether.
In its warning the FCA said ICOs are “very high-risk, speculative investments” where there is likely to be no investor protection.
Meanwhile Esma said consumers risk losing all their capital if they invest in ICOs, adding that some of these coins had “no tangible value”.