Bitcoin may just be a "virtual" currency, but there's no denying its rising value. The currency, which last month was trading on the order of roughly $30 (£20), is now valued at over $230 (£150).
On Tokyo-based Mt. Gox, the most popular place online for people to buy and sell Bitcoins with others around the world in their own local currencies, the last listed price for a single Bitcoin was $236. That's up more than 100 percent from roughly $100 a week ago.
Pinpointing the factors underlying Bitcoin's ascending popularity, however, is tricky. Bitcoin is based on a concept called "crypto-currency," using a peer-to-peer framework allowing its users to manage transactions and issue Bitcoins without any central financial or regulatory authority. The true identity of even its founder, colloquially known as "Satoshi Nakamoto," remains a mystery. Bitcoin currently has roughly 1.4 million users.
"Bitcoin's foundation is similar to Linux, which was open-source software designed to take on Microsoft's Windows," said Jon Matonis, a board member of the Bitcoin Foundation, which acts as an organising body for Bitcoin by aiming to provide software funding and also publish best practices for businesses transacting in Bitcoin.
The thinking among advocates is that by not being controlled by a corporate or government entity, Bitcoin is free of external political influence or tinkering. But Bitcoin is a speculative currency, and changes in outside markets may still have a bearing on its value.
Some have speculated that Bitcoin's value is soaring in part because of the unstable Euro, and in particular Cyprus' recent freezing of uninsured bank deposits amid the island country's debt crisis. The skyrocketing media attention the currency has attracted in recent weeks may also be playing a role in Bitcoin's price.
As its popularity has grown, more and more merchants have also started to accept Bitcoins as a method of payment. Etsy, Mega, Expensify and WordPress are just a few.
But whether $230 is a fair price for one Bitcoin is harder to say. "In all honesty, it's very hard to determine if it is undervalued, overvalued, or where it should be," said Michael Goldstein, a computer science student at the University of Texas at Austin who also operates a consulting site for companies looking to accept Bitcoin payments.
Other Bitcoin exchanges include Coinbase, Bitinstant, LocalBitCoins and CoinLab, which runs a Gox-like exchange for Canadians and Americans. But Mt. Gox, with 80 percent of all trades, is by far the largest.
Bitcoin's overall market reach, however, is still small. The total value of all Bitcoins currently in circulation is only about $300 million, according to Mt. Gox.
But as a decentralised platform for peer-to-peer online payments, Bitcoin is the biggest player, and it has the first mover advantage, Bitcoin Foundation's Matonis said.