Bitcoin's soaring value was down to 'infected' buyers, economists say

Barclays analysts compare speculation in digital currency to spread of infectious disease

The rise of bitcoin has comparisons with the spread of an infectious disease, according to economists who argue the digital currency may have peaked in value as more consumers become immune to its appeal.

Analysts at Barclays said the soaring value of the digital currency last year, when prices rose by more than 900%, was helped by new buyers being "infected" by the euphoria surrounding bitcoin. The price has since crashed from almost $20,000 before Christmas to less than $7,000.

Bitcoin is the first, and the biggest, "cryptocurrency" - a decentralised tradeable digital asset. Whether it is a bad investment is the big question. Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption - or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person.