There can't be many financial instruments that have generated intense debate and scare stories over the past year than digital currencies such as bitcoin.
This month, Bank of England (BoE) weighed into the debate, publishing a major new piece of research. Ever since academics and experts have been poring over the report, especially its warning that cryptocurrencies could pose a threat to financial stability.
The BoE pays particular attention to bitcoin. Like other virtual currencies, it allows users to exchange online credits for goods and services and can be created by using a computer to complete difficult tasks, a process known as mining.
While it believes bitcoin doesn't currently pose a material risk, mainly due to its limited use, the bank warns that it is possible to conceive the risks that may develop over time as it gains in popularity and if no controls are in place.
CNBC highlights the three key areas that the BoE believes could pose a threat with well-known voices in the industry adding to the argument.
The BoE suggests that "marked increases" in price could mean that a price crash might have greater impact. A chart showing the price of bitcoin since its inception in 2010 makes for some scary reading. Critics have likened it to the Dutch "tulip fever" of 17th century but advocates expect this to iron itself out as liquidity and volume increase over time.
"Anyone who has been following bitcoin would probably agree with the BoE that a future bitcoin price crash is not only conceivable but probable," Garrick Hileman, an economic historian at the London School of Economics, told CNBC via email.
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