Bitcoin price: Why is the cryptocurrency down today?
BITCOIN'S price has plummeted to the lowest level in around two years.
The cryptocurrency is currently worth less than half of its record value following further falls today.
Bitcoin is the world's biggest cryptocurrency, but its price has fallen to $29,386.
It has dropped from last year's record high of $68,789.63, prompted by regulatory crackdowns and bans in China and Russia, as well as concerns about inflation and interest rate rises.
Geopolitical tensions with Russia - the third largest crypto mining nation - and war in Ukraine has put pressure on prices.
The price of bitcoin hit a low of $26,401 in the past 24 hours and is currently trading at $29,386 at the time of writing as fears over rising inflation mount.
In the past eight sessions, Bitcoin has lost almost a third of its value - equal to around $13,000 - and is down more than 45 per cent so far this year.
That's below its most recent low point of $29,807 recorded in July last year.
Bitcoin and other cryptocurrencies are extremely volatile and can go down as well as up in the blink of an eye.
Investing in cryptocurrencies is extremely risky you could end up with far less than you invested - or even lose all your money.
It is important to never invest in something you don't understand.
Cryptocurrencies are not regulated in the same way as other financial products and if something goes wrong there's no one to complain to.
What is Bitcoin?
Bitcoin is a virtual currency that was created in 2009 by an unknown computer whizz using the alias Satoshi Nakamoto.
Unlike physical currencies such as pounds, dollars or euros, which come in physical notes and coins, Bitcoin isn't printed or minted.
Instead, Bitcoin tokens are a digital-only form of payment and are created by a computer code.
Why has the Bitcoin price gone down?
The value of Bitcoin is determined by how much people are willing to exchange it for and its price has fluctuated wildly since its launch.
It's currently valued at around $$29,386 - down by more than 6% over the past 24 hours, according to CoinMarketCap.
That is a long way down from last year when the currency hit record highs of nearly $69,000, helped by El Salvador making Bitcoin legal tender and regulatory approval of a Bitcoin futures ETF in the US.
Since then, it has seen regular slumps - eventually dropping to its current price - with the latest fall reflecting global markets.
How does Bitcoin work?
To process Bitcoin transactions, a procedure called "mining" must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution.
For each problem solved, one block of Bitcoin is processed. In addition, the miner is rewarded with new Bitcoin.
To compensate for the growing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady stream of new Bitcoins are produced each day.
There are currently about 18.9millon Bitcoin tokens in circulation.
To receive a Bitcoin, a user must have a Bitcoin address - a string of 27-34 letters and numbers - which acts as a kind of virtual postbox.
These addresses are in turn stored in Bitcoin wallets, which are used to manage savings.
The bulk of Bitcoin "mining" is done in China, where energy costs are cheaper than in places like the UK or US.
Is Bitcoin safe?
Anyone thinking of investing in Bitcoin or any other cryptocurrency should be very careful.
Their values are incredibly unpredictable, with the ability to plummet as quickly as they shoot up.
Like with all cryptocurrencies, this means that if you choose to invest, you can lose your money if the value drops.
For example, on January 9, 2018, Bitcoin and other major currencies crashed by £120billion after major monitoring platform CoinmarketCap decided to leave out the trading prices from South Korea.
Cryptocurrencies themselves are only regulated in the UK for anti-money laundering and counter-terrorist financing.
If you decide to invest, your money won't be covered by the Financial Services Compensation Scheme (FSCS) which usually protects up to £85,000 of your savings if a firm goes bust.
You also won't be able to go to the Financial Ombudsman Service if something goes wrong.
Firms offering cryptoassets must now be registered with the Financial Conduct Authority (FCA) and anyone who does invest in cryptocurrencies should check before investing.
In October 2020, the FCA banned Brits from buying a "harmful" type of cryptocurrency-related investment in the UK known as an exchange traded note.
Exchange traded notes are investment products that track the price of cryptocurrencies in the same way that others track the price of gold or other investments.
Investors in these products make or lose money based on a cryptocurrency's current or future price.
But people can still continue to buy cryptocurrencies directly and invest them or use them as currency.
How do I buy Bitcoin and how can I spend it?
Several marketplaces called “Bitcoin exchanges” allow people to buy or sell Bitcoins using different currencies.
People can also send Bitcoins to each other using mobile apps or their computers in the same way people send cash digitally.
You are also able to purchase Bitcoin through an online exchange or Bitcoin ATM.
If you have invested in Bitcoin, you can set up a virtual wallet to store, keep track and spend your digital money - but very few businesses accept Bitcoin as a form of payment.
You can use the Where To Spend Bitcoin UK website to find merchants that accept the currency.