How is a single bitcoin worth thousands of dollars?

In March of 2010, an enterprising early Bitcoin adoptee named “SmokeTooMuch” offered to sell 10,000 bitcoins for $50. No one took them up on their offer. At the time, Bitcoin was worth almost nothing for more than a year. No markets existed to exchange bitcoins. Few people actually knew about or used the cryptocurrency. Bitcoin existed as little more than a really cool idea and nothing more.

Around May and June of the same year, the cryptocurrency became worth around 1 U.S. cent. As more people learned about the technology behind cryptocurrencies, Bitcoin’s value grew until it was worth one U.S. dollar in Spring of 2011.

Now, Bitcoin is worth roughly $2700. SmokeTooMuch’s $50 offer would be worth $27 million today. The cryptocurrency has seen rises, crashes, and everything in between. Yet in the last month, the cryptocurrency increased by a whopping $600+ in value.

But how did this new currency grow so fast in such a short amount of time. Better yet, why is it currently more valuable than gold?

1. Cryptocurrency adoption is up.
   Thanks to apps and exchanges like Coinbase, cryptocurrencies are easier to buy now than ever before. These services also increase the profile of cryptocurrencies as viable, tradable assets, not unlike other currencies and securities. With an increase in accessibility and popularity comes an increase in demand, which the current supply of bitcoins can’t seem to keep up with.

2. Other cryptocurrencies are up.
   Bitcoin isn’t the only cryptocurrency around. New rules governing Litecoin make it faster and easier to exchange. Ethereum, another popular cryptocurrency, recently split into two different currencies, raising its profile and lowering its price of entry. As Bitcoin grew in popularity, so did all cryptocurrencies, which are cheaper than 1 BTC.

3. Politics causes people leave traditional currencies.
   The U.S. election, the British “Brexit” vote, and heightened regulations on Chinese money made people consider alternatives to their country’s currency. Since Bitcoin is decentralized and not governed by any one country, it’s not susceptible to major changes in valuation should a country do something that could make their money less valuable. Many people are using the cryptocurrency to keep their money safe from devaluation, or even to use it as they would paper money.

These are far from the only reasons for Bitcoin’s surge.
Like stocks, there are a million different factors that could impact Bitcoin’s price. For instance, popular cryptocurrency exchange Bitfinex is having trouble moving money from its Taiwanese based bank. Experts actually believe this is causing the cryptocurrency to increase in value instead of drop. This and many other related news items contribute to the rapid change in Bitcoin’s price.

Should you invest in Bitcoin?
Bitcoin is at all-time highs right now. Many cryptocurrency investors feel that it could come crashing down, as it has in the past. If that’s true, investing in cryptocurrencies now could mean losing a good chunk of your original investment. At the same time, the cryptocurrency could keep rising without fail, which would make your investment worth significantly more than before.

If you want to play it safe, you could wait for Bitcoin to come down in price, or invest in another, more affordable cryptocurrency. If you really want to invest in the cryptocurrency and think it might keep breaking records, you could always buy some ‘coins through Coinbase.