The value of a single Bitcoin, the virtual currency, surged past $1,000 ahead of Thanksgiving, per Mt Gox, which is a major exchange for the digital currency.
The value of Bitcoins has been soaring since U.S. officials testified the benefits of the virtual currency as a "legal means of exchange" to the U.S. Senate earlier in November.
Bitcoin has slowly and steadily become popular as it is difficult for one to trace transactions and the virtual currency has often been linked with illegal activities online.
In October, the website Silk Road where customers could purchase illegal drugs and pay by Bitcoins, was shut down.
At the time, market pundits were of the opinion that the crackdown would result in the value of the digital currency plunging. However, increasing confidence that regulators will not ban the currency has seen a value jump.
"For Bitcoin to go from zero to $1,000 in just five years has been amazing to watch," says Mike Hearn, a Bitcoin developer. "It's easy to forget that Bitcoin's true value is not in an arbitrary exchange rate, but in its ability to enable new applications and services which aren't possible with today's payment networks."
Partly the attraction toward Bitcoins may be due to the fact that the transactions have lower fees than those charged by several networks for debit and credit card payments.
"The card networks charge 1% to 3% per transaction, which is a lot of money to many merchants with thin profit margins," says Tyler Moore, an assistant professor in computer science at Southern Methodist University who has researched Bitcoin. "Bitcoin is a new entrant that may disrupt the dominance of the payment networks. That's one reason why people are so excited about it."
The growing popularity of Bitcoins is only too evident. Earlier in October, we reported that the first Bitcoin ATM in the world had gone live in Vancouver, Canada. Usesr would be able to exchange Bitcoins in lieu of cash and vice-versa thanks to the ATM.
Even though the value of one Bitcoin is worth $1,000, users can pay for goods using fractions of Bitcoins. However, the volatile nature of Bitcoins have prompted some people to say that it should be referred to as a commodity or stock rather than a currency.
