Bitcoins have a 'true value' - and it is less than half current levels, according to the chief investment strategist at Tilney Group.
Ben Seager Scott has run the numbers on the cyptocurrency and has put the true value of one bitcoin at just over $4,500 (£3,319).
His calculation is based on the cost of digitally “mining” a single bitcoin right now, which he has worked out to be about £3,319 - the “equilibrium price”.
Anything much higher than that is the result of speculation in the future direction of the price.
Mr Seagar-Scott's figure is less than half of the £8,400 price at which bitcoin is trading at the time of writing (22 January), though even this is significantly lower than at its peak at the end of last year where one bitcoin was priced at around $20,000 (£14,369) before it plummeted.
Mining a bitcoin means creating a new one, rather than buying an existing bitcoin. If a bitcoin can be mined for £3,315, then, according to Mr Seager-Scott, there is relatively little reason for the price to be much higher.
But he noted that the price of gold and other commodities fluctuates wildly, and trade above the cost of extracting them from the ground. He said this is particularly true of gold, where the vast bulk of the movement in the gold price is driven by people speculating, rather than those who actually buy gold to use it.
Because the amount of bitcoin in the world is finite, it is likely that the cost of mining each new bitcoin will rise. If that is the case, then buying now, in anticipation of a future rise in the cost of making the virtual currency, would be expected to generate a profit.
However questions have been raised about how sustainable it is to create more bitcoin.
Mr Seagar-Scott's research suggested the computing processing power required to create one bitcoin uses the same amount of electricity as Ireland does in a day.
A significant part of the demand for bitcoin comes from “people in China and Russia, and other places in emerging markets," Mr Seagar-Scott said.
"There are capital controls in those countries so the priority is getting money out of the country, they don’t mind losing money to achieve that.”
His comments come in the context of Jamie Dimon, chief executive of JP Morgan Chase saying he “regrets” having called bitcoin a fraud and says he now has “no opinion” on bitcoin.
Lilian Chovin, investment strategist at Coutts, said bitcoin may have a function as a payment method, but added "with demand for bitcoins taking off in the last few months, the cost of making transactions has risen to as high as $40 per transaction.
"This is a little high if you are trying to buy a sandwich for lunch.
"By comparison, debit card transactions typically cost around 30 basis points of the transaction – a £4 sandwich might come with a transaction cost of around a penny.