Digital currency exchange Coinbase said on Monday it was experiencing an outage due to an increase in traffic and trading volume.

One of the world's largest digital currency companies with operations in 32 countries, Coinbase engineers and support teams have been working to keep up with the volume, the exchange said in a statement.

The market capitalisation of digital currencies has increased by around 95 per cent to US$106 billion ($140 billion) over the past month as demand for crypto-assets has soared with the creation of new tokens to raise funding for start-ups using blockchain technology.

This is the second time in about two weeks that Coinbase had an outage due to a surge in trading volume.

Coinbase has two trading platforms, one for retail investors and one for institutions.

The outage occurred just as bitcoin had a more than 10 per cent drop in the price to US$2,640 ($3490), on the Bitstamp platform. Customers voiced on Twitter their displeasure at Coinbase for the outage, as it prevented them from taking advantage of the dip in price to buy bitcoins.

Despite Monday's fall in price, bitcoin still was up more 170 per cent so far this year.

At the same time that bitcoin dropped, other digital currencies have been gaining momentum.

Ethereum, which has the second-largest market capitalisation behind bitcoin, hit $569 in Australia on Tuesday.

"Digital coins are very much in vogue now," said Asher Tan, CEO of CoinJar Bitcoin exchange.

"Everywhere you go there are people raising ICO [Initial Coin Offerings]. Digital currencies have gained respect and the next wave is already here."

Companies have been raising millions of dollars in minutes, or even seconds, from investors wanting in on the next big tech start-up. Last week it took 30 seconds for Mozilla co-founder Brendan Eich to issue about US$35 million ($46.7 million) of basic attention token, the unit of exchange in a blockchain-based advertising platform built on top of the company's Brave browser.

Digital coins are very much in vogue now

Asher Tan, CEO of CoinJar Bitcoin exchange

Digital tokens tied to the blockchain platform issued this year have more than doubled in price on average since trading started, according to data compiled by Bloomberg. Tech start-ups are increasingly selling coins that can be used on their projects instead of resorting to traditional financing methods such as venture capital.

The sector isn't for the fainthearted. The apps and websites behind most of these tokens are still only in development stage. Most are sold for pennies on the dollar and volatility can be extreme. TaaS, a closed-end fund dedicated to blockchain markets, had the coins it sold this year double in price in five weeks, and then fall 35 per cent in two days.

But if you can stomach the risk, the rewards have been substantial. Coins from the 15 ICOs this year for which data is available have risen by an average of over 100 per cent, while shares sold in initial public offerings in the US this year have gained 13 per cent on average since they started trading.

"There's been overwhelming demand for coins," said Ron Quaranta, chairman of the Wall Street Blockchain Alliance. "Sure, a lot of it is based on speculation and traders looking to make a quick gain, but there's also a fundamental driver, which is the anticipation that the digital-currency market is maturing."

Prediction market platform Gnosis sold the highest valued tokens this year. The GNO token started trading at US$52 ($69) on May 1 and has more than quadrupled.

Even with growing acceptance of blockchain from companies ranging from Toyota Motor Corp to JPMorgan Chase & Co, some advocates of the technology say they're cautious of the digital tokens because of the exuberance sweeping through the cryptocurrency world.

"A lot of people are seeing it as a quick way to make money," said Alan Tsen, CEO of Fintech Victoria.

"A huge amount of projects is coming online. There is a question over whether all the competing coins can survive. It will be interesting to see how many will fall over and what the repercussions will be."

"It seems like a fad, and as a professional investor, it's not what we do," said David Dunn, president of Kingsbridge Wealth Management, who first bought Bitcoin in 2014 and has invested in blockchain-related companies. "I'd rather invest in the companies using the technology themselves. "

More than US$100 million ($133 million) of coins has been raised this year, surpassing total sales last year, while total issuance is expected to jump to about US$600 million, according to Nick Tomaino, principal at San Francisco-based venture-capital firm Runa Capital.

"There's a lot of hype, and a lot of money being raised because it's so easy for anyone to create these coins without having to deal with any third parties, and it's so easy for people to buy them," Tomaino said. "It can't be stopped."

Agencies, with Fairfax Media