Bitcoin, the digital currency, ended 2016 on a high, valued at more than $1,000 for the first time in three years. It was trading at $1,014.15 early Tuesday.
Bitcoin performed better than any other currency for the year, according to the BBC, climbing in value by nearly $600 or about 125 percent.
The surge in value, analysts say, stems from high demand in China, were most Bitcoin transactions take place. The virtual currency is popular among some Chinese as an anonymous and relatively inexpensive way to transfer money around the world.
The renminbi, China’s currency, fell seven percent last year.
As with any asset, Bitcoin’s value is determined by how much people are willing to pay for it. New Bitcoins are “mined” by powerful computers solving extremely difficult math problems. For each solution, a miner is rewarded with some amount of Bitcoin.
The problems become harder and harder to solve as more Bitcoins are produced. There are about 15 million Bitcoin in circulation, but because of the nature of the currency, only about 21 million can ever be mined. The limited amount of Bitcoin have led some to call it digital gold.
Bitcoin can be sent electronically to anyone with a bitcoin wallet, a string of 27 to 24 numbers and letters that slightly resembles an email address.
Launched in 2009, Bitcoin’s value has been extremely volatile, previously crossing the $1,000 mark in 2013 before crashing after a hack of a popular Bitcoin exchange, Mt. Gox, which caused the price to drop below $400.
