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Bitcoin Reuters

Dogecoin founder Jackson Palmer stated that bitcoin is a currency rather than an investment opportunity, and that bitcoin exchanges are "one of the worst things" to happen to the digital currency.

"Everybody here is sitting around thinking how much is my bitcoin worth in dollars," Palmer told delegates and attendees at cryptocurrency conference CoinSummit.

Palmer also claimed bitcoin exchanges are "one of the worst things" to happen to bitcoin, because they reinforce the idea of digital currency as an investment.

"The biggest challenge that bitcoin faces is investors," he said.

"That will be bitcoin's undoing, the fact that everyone cares so much about what it will cash out to in US dollars."

Palmer believes bitcoin is being marketed wrong. He chooses not to give exchange rates for his alternative cryptocurrency Dogecoin; on its website it says 1 Doge = 1 Doge.

His statement comes after the IRS issued an official statement about the tax treatment of bitcoin and other virtual currencies.

IRS ruling suggests that bitcoin should be treated like a property investment, with capital gain or loss, rather than a foreign currency.

"The notice provides that virtual currency is treated as property for US federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency," the IRS said in a statement.