Bitcoin price: what is the cryptocurrency, why has its stock value plummeted - and how to buy shares in UK

Dogecoin fan Elon Musk confirms Tesla will no longer accept Bitcoin as payment for its electric vehicles

Elon Musk sent shares of crypocurrencies tumbling when he confirmed Tesla will no longer accept Bitcoin as payment for its electric vehicles.

The move demonstrates a sharp u-turn from the billionaire entrepreneur whose company Tesla only recently bought $1.5 billion (£1.1b) shares in Bitcoin.

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Tesla also said at the time it would accept Bitcoin as payment for its products but Musk has put a stop to it over concerns of the crypto’s environmental impact.

Elon Musk has thrown his support behind cryptocurrencies prior to Tesla's billion-pound investment in Bitcoin. (Pic: Getty Images)

Bitcoin’s price immediately dropped 11%, with other cryptocurrencies experiencing sharp declines in value, following months of market growth and soaring popularity.

Here’s what Musk had to say.

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What did Elon Musk say about Bitcoin?

Elon Musk confirmed Tesla would suspend the use of Bitcoin as payment for its vehicles, weeks after introducing the initiative to accept the cryptocurrency.

In a Twitter post, Musk said: “We are concerned about rapidly increasing use of fossil fuel for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”

Musk reaffirmed his belief that cryptocurrency has a “promising future” but that it “cannot come at great cost to the environment”.

He also stated that Tesla would not be selling any Bitcoin and that the electric car company intends to use it for transactions “as soon as mining transitions to more sustainable energy”.

What is Bitcoin and how does it work?

Bitcoin is a digital coin invented in 2008 and known as a cryptocurrency which can be used in the exchange of goods online.

The coins are kept in a digital wallet app on a smartphone or digital device and can be sent and received in a few clicks.

Coins are global and an online version of cash but are different to the traditional currencies used in countries around the world.

It doesn't have a central bank or administrator.

Every transaction or trade is recorded in a public ledger called a blockchain to make it possible to trace the history of Bitcoins and prevent fraud.

Why had Bitcoin's share price soared to record highs in early 2021?

Musk, the world's richest person, posted on Twitter that he was a supporter of cryptocurrencies, leading to a surge in popularity of companies like Bitcoin.

Earlier this year he threw his support behind Dogecoin, which, in conjunction with social media speculation by Reddit users, saw its share soar 800%.

Then the business magnate, who founded American aerospace manufacturer and transporter SpaceX, put a rocket up Bitcoin.

Tesla's investment sparked a jump of 14% to a price of $46,950 (£34,032) per coin - a 300% increase in Bitcoin's stock value to this time last year.

A Tesla statement read at the time: "We expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt."

The move has been described by analysts as "potentially game changing" as cryptocurrencies move to a more mainstream position in the financial world – before Musk’s latest Tweet rocked the world of cryptocurrencies.

Is Bitcoin a good investment?

The appeal of Bitcoin is that its currency is global and isn't controlled by any government or banks, making it cheaper to make transactions.

It had recently seen a boost in popularity after Musk said he was a supporter of the cryptocurrency and even changed his Twitter bio to #bitcoin.

Musk's comments and actions have led to market movements of Bitcoin and Dogecoin in recent times due to his personal wealth and influence.

However, there are some concerns around turning 'real' money into cryptocurrencies, such as Bitcoin, largely based around security.

It is possible to lose a Bitcoin wallet or delete Bitcoins and lose them forever.

Andrew Bailey, governor of the Bank of England, has reiterated his scepticism about cryptocurrencies, telling MPs that Bitcoin had "no intrinsic value at all".

He said: “I’ve said a number of times, ‘only buy bitcoin if you’re prepared to lose all your money’. It doesn’t mean you will lose all your money, it doesn’t mean the value will go to nothing, but it has no intrinsic value. People may want it, they may want to collect it, but it doesn’t have any intrinsic value at all.”

How do I buy Bitcoin in the UK?

It can be a tricky field to navigate for the uninitiated but if you're confident in buying cryptocurrencies then there are numerous places to go.

Global cryptocurrency websites like Coinbase Pro, Crypto.com, CoinJar, Wirex, and Coinfloor are available with quick how-to guides to start trading.

In October 2020, Brits were banned from buying some cryptocurrencies after a rise in the number of people making bad investments and losing money.

The Financial Conduct Authority (FCA) warns people about the risk of investing in cryptocurrencies, referencing price volatility, product complexity, charges and fees, marketing materials and consumer protection.