Bitcoin can work at any time and anywhere with an internet connection (stock image)

There's no avoiding talk of bitcoin at the moment, but understanding what it actually is - and how it works - may be a little difficult to grasp.

Is the digital currency something that the average consumer can use - and make money from? We answer all your burning questions here.

What is bitcoin and how does it work?

Bitcoin is a virtual currency which has actually been around since 2009.

It can be used to buy goods and services and the transaction must carry the digital signature of every bitcoin owner.

Shopping with Bitcoin is not just limited to online purchases, through a Bitcoin app, you can buy goods using a designated Bitcoin till – the currency equivalent will be deducted from your bitcoin app account.

As at 2015 the number of merchants accepting bitcoin globally was in excess of 100,000, according to the International Business Times.

Why has it increased in value so much?

Since its establishment in 2009 the value of Bitcoin has exploded, in the past month alone the value has increased by approximately 70pc.

There are several factors behind why it has increased in value;

1) There has been an increase in awareness and demand for the currency. With only 21 million bitcoins ever going to be produced, demand and supply are going to have a major impact on the price of the currency.

2) With the current political uncertainty people are turning to bitcoins as their digital “safe heaven” currency.

3) Bitcoin can also be used as a crowd funding mechanism.

Where in the world accepts bitcoin?

Country-wise Japan accepts bitcoin as a legal currency, and Australia is following suit.

According to Lory Kehoe, director of strategy & operations at Deloitte, it is expected that other countries will follow suit.

In terms of companies, the currency is accepted by Mirosoft, Stripe, and PayPal among others.

Can I buy bitcoin - and how much would that set me back?

Yes, by downloading a coin based app you can buy bitcoin. Currently one bitcoin is valued at €4,000, however it is possible to buy part of a bitcoin.

But isn’t bitcoin just for baddies online...?

Certainly bitcoin has received a lot of bad press, most recently with the WannaCry cyber attack. However, according to Mr Kehoe, people think they are more anonymous than they actually are online.

In addition law enforcers are becoming more aware of the use of bitcoin for illegal reasons online, and taking actions to stop it.

Final question, is this valuation just a bubble waiting to burst?

There are worries that this is a bubble and investing in bitcoin comes down to prudence in a lot of ways. If you are considering investing in bitcoin then you need to ascertain what is your attitude to risk.

In addition there are many crypto currencies out there and the future of the currency is far from certain.

That said, the currency has been around since 2009 and so far it’s value is only going one way.

Online Editors