It has been hailed as an easy get-rich-quick scheme, but according to one financial expert, Bitcoin is the greatest scam in history.

Bill Harris, founding CEO of Paypal, said the so-called cryptocurrency has 'no value', and claimed it is part of a huge 'pump-and-dump' scheme.

Bitcoin targets ill-informed buyers 'caught up in the spiral of greed', according to Harris, leading to a huge shift of wealth from ordinary families to internet scammers.

Harris' claims follow similar warnings made last month by Bank of England governor Mark Carney who said Bitcoin showed the 'classic hallmarks of a bubble' and that only 'fools' are investing in it.

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It has been hailed as an easy get-rich-quick scheme, but according to one financial expert, Bitcoin is the 'greatest scam in history'. Bill Harris (file photo), founding Paypal CEO, claimed the digital currency has 'no value'

In an opinion piece for Recode, Harris wrote: 'Bitcoin is a scam. In my opinion, it’s a colossal pump-and-dump scheme, the likes of which the world has never seen.

'In a pump-and-dump game, promoters 'pump' up the price of a security creating a speculative frenzy, then 'dump' some of their holdings at artificially high prices. And some cryptocurrencies are pure frauds.

'The losers are ill-informed buyers caught up in the spiral of greed. The result is a massive transfer of wealth from ordinary families to internet promoters.'

Bitcoin is a cryptocurrency – an online type of money created using computer code that are stored in virtual wallets known as blockchains that keep track of your money.

One of its selling points is that it can be used to buy things anonymously, and cryptocurrencies are frequently used by criminals to buy drugs and guns.

At the time of publishing a single Bitcoin is worth over £6,500 ($9,000), with the world's top 1,500 cryptocurrencies holding a total value of £215 billion ($300 billion) according to some estimates.

WHO IS FOUNDING PAYPAL CEO BILL HARRIS? Bill Harris was appointed CEO of X.com, a financial services company founded by Elon Musk, in December 1999. The company merged with software firm Confinity three months later to form the online payments service Paypal, with Harris appointed CEO. Bill Harris was ousted from the CEO role just two months later in April 2000, with Musk taking over the role while Peter Thiel was appointed Chairman. Rumours suggest Harris' departure was due to his inability to handle PayPal's skyrocketing growth. Harris has since founded digital financial firm Personal Capital, based in San Francisco, California. Advertisement

Bitcoin targets ill-informed buyers 'caught up in the spiral of greed', according to Harris, leading to a shift of wealth from ordinary families to internet promoters (stock image)

But Harris, founder of California-based financial firm Personal Capital, said the idea that a Bitcoin has value is wrong.

He wrote: 'It helps to understand that a bitcoin has no value at all.

'Promoters claim cryptocurrency is valuable as (1) a means of payment, (2) a store of value and/or (3) a thing in itself. None of these claims are true.

'For the vast majority of uses, bitcoin has no role. Dollars, pounds, euros, yen and renminbi are better means of payment, stores of value and things in themselves.'

WHAT IS BITCOIN AND HOW DOES IT WORK? What are Bitcoins? Bitcoin is a cryptocurrency – an online type of money which is created using computer code. It was invented in 2009 by someone calling themselves Satoshi Nakamoto – a mysterious computer coder who has never been found or identified themselves. Bitcoins are created without using middlemen – which means no banks take a fee when they are exchanged. They are stored in what are called virtual wallets known as blockchains which keep track of your money. One of the selling points is that it can be used to buy things anonymously. However, this has left the currency open to criticism and calls for tighter regulation as terrorists and criminals have used to it traffic drugs and guns. How are they created? Bitcoins are created through a process known as ‘mining’ which involves computers solving difficult maths problems with a 64-digit solution. Every time a new maths problem is solved a fresh Bitcoin is produced. Some people create powerful computers for the sole purpose of creating Bitcoins. But the number which can be produced are limited – meaning the currency should maintain a certain level of value. Why are they popular? Some people value Bitcoin because it is a form of currency which cuts out banking middlemen and the Government – a form of peer to peer currency exchange. And all transactions are recorded publicly so it is very hard to counterfeit. Its value surged in 2017 – beating the ‘tulip mania’ of the 17th Century and the dot com boom of the early 2000s to be the biggest bubble in history. But the bubble appears to have now burst and questions remain over what market there is for it long-term. Some shops and restaurants are accepting for purchases, but overall this is a tiny part of the market of the real economy. While there are concerns Bitcoins can be hacked. Advertisement

Bitcoin saw its value go through the roof last year - beating the 17th Century dutch Tulip Mania, the South Sea bubble and the dot com bubble of the early 2000s to become the biggest economic bubble in history.

But its value has plummeted this year and is nearly half the peak of £14,000 ($20,000).

In a speech delivered via video-link to the Inaugural Scottish Economics conference last month, Bank of England governor Mark Carney branded cryptocurrencies a 'failure' and a lottery.

The governor warned that the 'currencies' showed the 'classic hallmarks of bubbles' as he called for them held to the 'same standards as the rest of the financial system'.