A crypto-currency is, according to one definition, “a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of computerised database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership”. Got that?

Some new-fangled kind of money, then?

Exactly. Of course the idea of electronic money has been around since the dawn of the computer age but crypto-currencies as we known them are a little over a decade old. Bitcoin is the best known (it has been dubbed “the Coca-Cola” of crypto-currencies) but there are many others with such fantastic names as Ethereum, Ripple, Litecoin, Tether and Libra.

What’s the point of them?

For crypto-anarchists it means taking control of the issuing of money from out of the hands of governments and central banks and decentralising it, in the jargon. For dealers in drugs, arms, stolen goods and anything else that’s traded on the so-called Darknet, it’s a convenient way of buying and selling while preventing law enforcement bodies being able to follow the money trail. For those looking to do what people have been doing since money was invented – turn a quick buck by betting against rises and falls in the values of currencies – it’s just another thing to trade. Recently, however, the value of crypto-currencies have soared: Bitcoin hit an all-time high on Sunday, going over the $34,000 (£24,850) mark and giving it a 300% increase in value over the course of the last year. Ethereum has done even better, increasing in value by a cool 465% over the course of 2020.

Why now?

Despite the outlaw reputation of crypto-currencies, more and more online vendors are accepting them. As of 2021, PayPal customers in the US can use Bitcoin to pay for items. Meanwhile a fall in the value of the US dollar has seen speculators heading for crypto-currencies instead.

So are crypto-currencies a sure thing?

Not at all. This sort of rapid rise has happened before, remember. In 2017 the value of Bitcoin collapsed after a bull run, though not the sort for which Pamplona is famous – this is stock market lingo for a long and continual period of rising prices. These tend to be followed by what’s euphemistically known as “a correction”, which is what happened to Bitcoin, which fell to a price of around $3300, a tenth of its value today. That sort of “correction” would be untenable in a more established currency. The inherent volatility of crypto-currencies caused Bank of England governor Andrew Bailey to caution in October against becoming too reliant on them. “I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value,” he said.