Bitcoin is down more than three per cent today (November 9), opening at £5,687.34 ($7,458.80), according to CoinDesk.
The price of a single bitcoin at 3.18pm GMT was £5,491.74 ($7,202.28) per token.
The drop comes off the back of the bitcoin community rejecting a controversial Segwit2x software upgrade, which would have increased the bitcoin block size to 2MB.
Rejecting Segwit2x temporarily boosted confidence in the token, inflating the price for less than an hour, before stabilising around £5,490 ($7,200).
For the most up to date bitcoin price, check out the interactive CoinDesk widget below.
What is bitcoin?
Bitcoin is a digital currency token, created around 2009 by an obscure software engineer or a coding collective, operating under the name Satoshi Nakamoto.
Unlike fiat currencies, bitcoin is a decentralised monetary system, without any ties to banks or governments.
Bitcoins do not have a physical token and are collectively owned through a public ledger known as the blockchain.
Tokens are obtained through mining – a power intensive process that utilises multiple computer GPU’s to solve millions of lines of code.
Each bitcoin is comprised of smaller units known as satoshis, and the token’s software limits it 21 billion tokens at any given time.
The first ever bitcoin transaction was recorded on May 22 2010, by Hungarian Laszlo Hanyech, who spent a staggering 10,000 tokens to buy two pizzas. An investment that would have equalled over £53 million ($70 million today)
In 2014, he posted on the Bitcoin Talk forum, saying: “Three to four years ago there were less than 100 people frequenting this forum, and I was pretty happy to trade 10,000 coins for pizza.
“I mean people can say I’m stupid, but it was a great deal at the time.
“I don’t think anyone could have known it would take off like this.”
Where does bitcoin’s value come from?
The main driver behind bitcoin’s price is the demand, supply and the usefulness it provides.
Because bitcoin is not valued against the gold standard, like most global currencies, some have argued that the token is a commodity and not real money.
Jeffrey Dorfman, professor of economics at The University of Georgia, argued that bitcoin will remain a niche that simply cannot replace physical money.
He explained in Forbes magazine: “Without a stable value bitcoin cannot truly be a currency.
“Rather it is a commodity asset that one trades, like gold or silver, in hopes that its value will rise and yield a trading profit.
“There is nothing wrong with speculation; the actions of speculators help to add market liquidity and to determine the market value of assets.
“However, usually the asset being valued also has an actual underlying use: you can invest in gold or use it to make jewellery or electronic components.
“Bitcoins have no uses other than allowing people to hide wealth, conceal (often illegal) transactions, and make and lose money by trading them.”