Just like other currencies, bitcoins can be exchanged for goods and services -- or for other currencies.
London: Bitcoin surged through the USD 5,000 level on Thursday for the first time since the launch of the unregulated virtual currency more than 8 years ago.
The cryptocurrency struck a new record high of USD 5,183.97 around 0820 GMT according to financial data provider Bloomberg.
Bitcoin, a virtual currency created from computer code, was worth only a few US cents was launched in 2009 by someone using the Japanese-sounding name Satoshi Nakamoto.
Unlike a real-world unit such as the US dollar or euro, bitcoin has no central bank and is not backed by any government. Just like other currencies, bitcoins can be exchanged for goods and services -- or for other currencies -- provided the other party is willing to accept them.
Bitcoin's community of users control and regulate the currency, and the anonymity of transactions that endears it to libertarians has raised concerns that it can be abused by criminals.
The lack of transparency has also sparked concerns that the swings in its value may be due to speculative trading.