SILVER SPRING, Md. — The seemingly unstoppable rise of Bitcoin continued Tuesday with the cost of a single unit of the digital currency rising above $50,000 for the first time.
The price of Bitcoin has risen almost 200% in the last three months and its volatility was on display Tuesday. After rising above $50,600, it fell back to $48,674 at 2:15 p.m. ET. At that price, with about 18.6 million Bitcoins in circulation, Bitcoin has a market value of nearly $907 billion.
Bitcoin is rallying as more companies signal the digital currency could eventually gain widespread acceptance as a means of payment. The vast majority of those who have acquired Bitcoin have treated it as a commodity, like gold, with few places accepting it in exchange for goods or services.
Companies have been leery because of Bitcoin’s volatility.
Last week, however, the electric car company Tesla sent a tremor through the digital currency markets, saying that it was buying $1.5 billion in Bitcoin as part of a new investment strategy.
Here’s a brief look at the bitcoin frenzy:
How Bitcoin works: Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who “mine” them by lending computing power to verify other users’ transactions. They receive bitcoins in exchange.
The coins also can be bought and sold on exchanges with U.S. dollars and other currencies. Some businesses also accept bitcoin, but its popularity has stalled out in recent years.
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Using Bitcoin for purchases: The digital currency has become popular enough that more than 300,000 transactions typically occur in an average day, according to bitcoin wallet site blockchain.info. Still, its popularity is low compared with cash and credit cards.
Besides Tesla, few companies have said they’ll accept Bitcoin as payment. Overstock.com appears to accept Bitcoin for most listings on its website, including cameras, vacuums and clothes. PayPal allows its accountholders to buy, sell and hold four cryptocurrencies, including Bitcoin — but you can’t use it to pay people, at least not yet.