I'm sure that it can't have escaped most people's attention that the price of Bitcoin has absolutely soared in recent weeks. The price of the innovative, cryptographically secured, digital currency has burst through some newsworthy levels - reaching $100 per bitcoin last week while the total value of all bitcoin in circulation reached a net value of $1 billion shortly after. Since Easter the price rise has accelerated to the point where I wouldn't be surprised if it burst through the £100 per bitcoin barrier within 48 hours.

These astonishing moves have caught the eye of the BBC, Economist, Moneyweek and the international press. This added media attention is adding fuel to what is already a very hot fire and the question that nobody seems to be able to answer is - how high can this thing go?

What the hell is a bitcoin anyway?

Before even attempting to answer how high it can go, it's worth recapping on what a bitcoin is to those who are completely befuddled - there's a good primer on Wikipedia, and a quick web search will throw up dozens of links that will give a fuller explanation than the next paragraph.

I am no expert, but have read up as much as most people will ever be willing to - so here's my take. In brief, it's a decentralised, open-source, digital form of money transacted peer-to-peer to and from virtual 'wallets' that can be downloaded from bitcoin.org and third party websites. It was born from the mind of an anonymous Japanese hacker (or group of hackers) who is/are generally known by the avatar "Satoshi Nakamoto".

The currency is secured not by the faith of e.g. the US government, but by trust in the cryptography that backs it. The money supply of bitcoin grows gradually, as new coin is paid to programmers who spend time verifying the so-called 'blockchain' - the history of all transactions in the network to ensure no duplicate transactions.

You can buy or sell bitcoin for regular currencies such as the pound or dollar and can 'spend' your bitcoin at an increasing number of venues as we'll see. 80% of the transactions between Bitcoin and 'real' money happen at the website MtGox which is Japanese owned.

Who is using Bitcoin?

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