Despite doubts in some quarters that Bitcoin will endure, or that governments jealous of their monetary monopoly powers might ban it – investing in this new area has generated a 4847 per cent return for the Bitcoin Fund, traded on the Exante platform, a Malta-registered business. This publication interviewed the firm in May.

To give some measure of comparison – although the term “hedge fund” covers a wide spectrum of investment styles – a broad gauge of returns from Hedge Fund Research shows total returns for the year so far amounted to 7.2 per cent (HFRI Fund Weighted Composite Index, October).

“The Bitcoin Fund has now secured its place in financial history as never before such an exceptional result has been achieved by a fund of its kind,” Exante said in a statement.

Bitcoin is seen as an inelastic type of money as its quantity cannot be indefinitely increased. According to one description on Wikipedia, Bitcoin “is a digital currency first described in a 2008 paper by pseudonymous developer Satoshi Nakamoto, who called it a peer-to-peer, electronic cash system.”

The creation and exchange of Bitcoin is based on an open-source cryptographic protocol and is not managed by any central authority. Each Bitcoin is subdivided down to eight decimal places, forming 100 million smaller units called satoshis. Bitcoin can be transferred through a computer or smartphone without an intermediate financial institution such as a bank. Using an analogy with the language of the gold market, Bitcoin processing is secured by servers called “Bitcoin miners”. These servers communicate over an internet-based network and confirm transactions by adding them to a ledger which is updated and archived periodically. Each new ledger update creates some newly-minted Bitcoin; a crucial feature is that the number of new Bitcoin units or “Bitcoins” created in each update is halved every four years until the year 2140 when this number will decline to zero. After that time no more Bitcoins will be created - the total number of Bitcoins will have reached a maximum of 21 million Bitcoins.

The Bitcoin Fund is a relative minnow compared with many hedge funds – it has assets over just over $35 million. Unlike most hedge funds, it does not charge a performance fee, but a 1.75 per cent annual management charge and a 0.5 per cent transaction fee; it doesn’t use leverage or employ derivates to manage risk exposure. As at 18 November, the value of a unit in the Bitcoin Fund was $658, Exante said.