Bitcoin is having another one of those days.

Having smashed through $5,000 for the first time yesterday, the cryptocurrency soared to $5,846 this morning before dipping back to $5,600 as I type. Last night, IMF chief Christine Lagarde said central bankers and regulators must take digital currencies such as bitcoin seriously, given the way

they can disrupt the status quo.

'We are about to see massive disruptions': IMF chief on digital currency future

Many in the financial industry are struggling to come to terms with the rise of digital currencies, and unconvinced that bitcoin may be an unsustainable bubble. Jamie Dimon of JP Morgan became the poster boy for the sceptics last month, when he declared that bitcoin was a fraud that wouldn’t survive. Yesterday he declined to take questions on the issue….

Sir Howard Davies, chairman of Royal Bank of Scotland, argues that the blockchain technology which underpins bitcoin should be a useful ‘utility’ to improve the financial system operate.

He told Bloomberg TV this morning:

I can see that a cryptocurrency like bitcoin can be useful in a blockchain context and speeding up interbank transactions.

But, Sir Howard reckons that bitcoin’s extreme volatility means it can’t be a serious store of value for investors. UBS is also sceptical, saying bitcoin seems to be a bubble. But again, they’re attracted to the blockchain — the digital ledger that tracks digital transations.

In a new report, they say:

Cryptocurrencies have soared in popularity since 2008, with more than 1,000 in existence today and an aggregate value greater than the market capitalization of IBM.

But we are highly doubtful whether they will ever become mainstream currencies. The need for companies and individuals to pay tax receipts in government-issued currency, and the potentially unlimited crypto-money supply, pose significant barriers to widespread adoption. We think the sharp rise in crypto-currency valuations in recent months is a speculative bubble.

But while we are doubtful cryptocurrencies will ever become a mainstream means of exchange, the underlying technology, blockchain, is likely to have a significant impact in industries ranging from finance to manufacturing, healthcare, and utilities. We estimate that blockchain could add as much as USD 300-400bn of annual economic value globally by 2027.