Bitcoin just hit a record high. But what is it, and why is it surging?

The price of bitcoin is currently surging, reaching an all-time high and surpassing the market value of major companies like Goldman Sachs.

But you might be asking yourself, “What even is bitcoin?”

If you are, you’re not alone.

According to a recent survey from LendEDU, almost 80 percent of Americans say they have heard of bitcoin before — but only about 40 percent of people really know what it is.

What is bitcoin?

Created in 2009, the cryptocurrency enables users to buy stuff without using a bank or picking up transaction fees, according to CNN. It also enables the user to remain anonymous; bitcoin itself was created by an unknown person using the alias Satoshi Nakamoto.

It’s fairly easy to use: similar to digital cash, you can use mobile apps and computers to send bitcoins, CNN reported.

How can I get bitcoins?

Currently, one bitcoin is worth around $5,600 , so you can buy one for that price. You can also “mine” more by solving “complex math problems” with your computer in a process CNBC called “complicated, mathematical wizardry.”

There’s still an increasing number of bitcoins, too, from the “mining” process, but that will end whenever the number of coins reaches 21 million — expected to happen in 2040, according to CNBC.

Where can I use bitcoins?

You can use bitcoins on various websites, according to Business Insider, including Microsoft to buy movies and video games and Expedia for hotel bookings.

Here’s a website that shows some of the restaurants across the United States that accept bitcoins.

What’s the controversy over bitcoin?

Bitcoin has attracted its fair share of detractors, including JPMorgan Chase CEO Jamie Dimon, who called the cryptocurrency a “fraud” last month, according to Market Watch.

“Bitcoin will eventually blow up. It’s a fraud,” he said. “It’s worse than tulip bulbs and won’t end well.”

Dimon may be right over the long haul, but not right now.

According to The Guardian, the price of bitcoin has dramatically risen past $5,000 to an all-time high. The currency’s price sat at $5,585 as of 9 a.m. Friday, and hit its peak at around $5,866.

Its value rose more than $500 on Friday morning, according to Business Insider, meaning its price has increased by around 500 percent this year and 30 percent in one week.

That means one bitcoin is worth four times as much as an ounce of gold, The Guardian wrote.

It’s also upending some of the long-time players in the financial market, with the total value of all bitcoins surpassing the total value of outstanding shares of stock of Goldman Sachs and of Morgan Stanley, according to CNBC.

Why is bitcoin surging?

What is prompting the rise of this controversial currency? There are a few reasons, according to Market Watch, including attention from Wall Street, speculation that China might license exchanges for digital currency and rumors that Amazon.com might accept bitcoin.

Even Mike Novogratz, a billionaire ex-hedge fund manager, said more people in the financial industry will likely start using bitcoin, according to CryptoCoinsNews.

“I can hear the herd coming,” he said.

But don’t get too excited about the crazy rise of bitcoin — Daniel Murray, global head of research for EFG Asset Management, told The Guardian the currency’s value has risen in the past, only to fall again.

“It is hard to argue that bitcoin does anything better than existing currency arrangements whilst it does some things to a lower standard,” he said. “Individuals are already able to transact electronically using a plastic card.”

This story was originally published October 13, 2017 at 8:00 AM with the headline "Bitcoin just hit a record high. But what is it, and why is it surging?."