There isn't any national treasury backing the bitcoin, nor does anyone have great stores of physical bitcoins lying around. Yet more than $1 billion worth of this invented currency is in circulation—more than the entire currency stock of 20 countries, Fox News reports. A single bitcoin is currently worth more than $90 US. What's the appeal? Well, some say it's because global currency markets are so unstable that bitcoins, which are distributed to people who donate web server space to the bitcoin system, seem more stable than cash.
"Because of what's going on in Cyprus and Europe, people are trying to pull their money out of banks," says BitPay CEO Tony Gallippi. "So they buy gold, they put it under the mattress, or they buy bitcoin." But others have another theory. Because bitcoin can be traded anonymously, like a digital form of cash, they believe bitcoin is fueling online black markets and drug markets. Gallippi scoffs at that concern. "With any technology," he says, "criminals are going to use it for something." TechCrunch has more background on how the system works.