The value of virtual currency Bitcoin hit a record high this month as the price for an individual Bitcoin rose to around $147 (£98) against a backdrop of increasing distrust in the banking system sparked by the crisis in Cyprus.
This rise in value sees a huge increase from its value of $30 last month, which in turn grew from $14 the month before that in January.
However, the swift rise was followed by a sharp drop following a hacking attack on several Bitcoin exchanges.
The Guardian attributes this sudden rise in value to the banking crisis in Cyprus, where for people fearing for their bank deposits in Southern Europe see the Bitcoin as an attractive new way to invest money.
The Bitcoin was originally created in 2009 by a hacker under the pseudonym Satashi Nakamot in order to trade goods without being watched by financial regulators.
Each Bitcoin is generated through a computer process, known as ‘mining’, and the algorithm regulates the release of Bitcoins to one every 10 minutes.
Much of its attraction lies in the fact that it is a decentralised currency, is untraceable, and can be used to trade goods without being taxed.
A growing number of sites now accept Bitcoins as payment, and while many sell illegal goods, others that will accept the coin include sites selling electronic goods.
The sharp rise in the value of Bitcoins was followed by a swift fall before stabilising around the $130 mark.
The fall came after an hour long outage at the world’s largest Bitcoin exchange, MT Gox.
It released a statement saying that “due to high volume trading at the moment, there is a lag in trading and order cancellation”.
It was thought that MT Gox and other exchanges were hit by hack attacks. On top of this the Bitcoin wallet service, Instawallet suspended its services after a security breach, and has announced that it will be unable to resume the service until an ‘alternative architecture’ is developed.