Bitcoin riding a 'speculative mania' - Australia central bank governor

The head of Australia's central bank has described the rocketing value of Bitcoin as "speculative mania".

Philip Lowe, governor of the Reserve Bank of Australia, criticised the cryptocurrency at the Australian Payment Summit.

While saying that the central bank was interested in issuing a form of digital money potentially using the same technology that Bitcoin is based on, Mr Lowe was critical of Bitcoin itself.

"The current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment," he said.

Bitcoin "seems more likely to be attractive to those who want to make transactions in the black or illegal economy" than to regular economic actors, Mr Lowe suggested.

His comments follow an explosion in the value of Bitcoin as well as the diminishing use of cash for transactions, with many more people paying for goods online or with cards.

The digital cash jumped 25% in value after a futures market in it opened this week. Its value is now up 1,600% in the year to date, beginning the year below $1,000 (£748).

In amazement, market analysts have watched the cryptocurrency's leap from record to record in recent days, and continue to ponder whether it is a bubble waiting to burst.

The chairman and chief executive of JPMorgan Chase (Swiss: JPM-USD.SW - news) , Jamie Dimon, described Bitcoin as a "fraud" earlier this year and told his company's investors it was "worse than tulip bulbs" - a reference to the speculative bubble that rocked the Dutch economy in the 17th century.

Bitcoin has come a long way since 22 July 2010, when Laszlo Hanyecz made the first purchase of physical goods using Bitcoin, spending 10,000 on two pizzas.

The same amount today would cover a Notting Hill mansion valued at £17m - and despite fears of a bubble, the sellers of 4 Stanley Gardens are only accepting bids in the digital cash.