Digital currency bitcoin is breaking all records with its price rise from $960 at the start of this year to around $1675 at the time of writing.

This strong growth acts as an incentive for investors who are constantly looking for profitable avenues. However, such high spikes in value also invites speculation that the cryptocurrency industry is in a bubble.

The German bank Bundesbank has warned users against bitcoin. Speaking with Die Welt am Sonntag, Bundesbank Board Member Carl-Ludwig Thiele said (Google translated):

“Bitcoin is a speculative object whose value changes rapidly. In the end, things went up steeply, but that looked different”.

“From our point of view, bitcoin is not a suitable medium for storing values. This shows a simple view of the very fluctuating course development”.

Although major central banks are researching the concept of central bank issued digital currencies (CBDCs) to tap into the advantages posed by them, authorities have maintained a cautious stance with regard to bitcoin. Thiele explained:

"Bitcoin is a means of exchange which is not issued by a central bank, but by unidentified actors. I do not see it as a currency. If you think Bitcoin would be as safe as the euro or the dollar, you have to take responsibility for it.

"We can only warn people not to use the bitcoin as a value preservative. But we do not make investment decisions for the citizens."

However, Thiele sees no problem with bitcoin being used as a means of payment. To that end, he emphasizes that users should not breach anti-money laundering (AML) rules while using the digital currency.