Bitcoin is often linked to illicit purchases and money laundering in the popular press, but a new charity is hoping to urge users of the currency to be generous with their virtual money.

A group soliciting donations for charities using Bitcoins launched in New York City on Tuesday. The group, dubbed the BitGive Foundation, has not yet decided which charities it will partner with, but a company statement says it plans to focus on "environmental and public health causes worldwide."

For those who have missed the currency's intermittent periods of hype, Bitcoin is a virtual currency that has gained visibility in the last few years with its volatile exchange rate. It has also gained mainstream use on blogging site Wordpress and social news site Reddit. Some charities and non-profits also accept Bitcoin donations, not to mention the Libertarian Party.

Still, it is BitGive's premise that highlights the currency's high volatility. The foundation says it will hold donations in the form of Bitcoins, which have shown the potential for remarkably fast appreciation. At the end of December, one Bitcoin was worth around $14. Today, it's around $100.

And BitGive sees the value only going up, which the foundation believes makes it a uniquely good vehicle for charitable donations. In this way, a donation is itself a sort of investment.

"The expected increase in value of Bitcoin will make donations grow over time, giving the foundation more financial stability and increasing funds to provide to charitable causes," says Connie Gallippi, executive director of the BitGive Foundation. Give BitGive a $10 donation today, in other words, and watch that donation grow in value as Bitcoins appreciate.

In addition, Bitcoin in one sense seems destined for appreciation, as there is a limited supply – the system is designed to only ever generate 21 million Bitcoins.

Still, Bitcoin-based charitable giving may be ill-advised for the same reason that Bitcoin is a risky investment: its value, while much higher than it was one year ago, is still highly volatile.

"I don't think anyone knows what Bitcoins are going to be worth at any point in time," says Reuben Grinberg, an associate at New York-based law firm Davis Polk who advises clients about digital currency issues.

Indeed, while Bitcoin is far more valuable now than in January, it is worth less than half of what it was at its peak this year, when the exchange rate was at $266 for one Bitcoin. As Forbes pointed out at the height of that bubble, the currency has been subject to a string of booms and busts in the last two years alone.

Donate your $10 when Bitcoin's value has spiked, in other words, and your donation might soon be worth much less if the bubble pops.

The currency's volatility has been driven in part by media hype and the general newness of the currency. Grinberg says it's possible that as Bitcoin becomes more well-known and widely used, volatility could decline:

"There's a chance that people being more educated in general about Bitcoin and having more people know about it could help cut down on these large boom and bust cycles," he says.

Then again, masses of ill-informed investors hoping to quickly capitalize on Bitcoin boom and busts might further destabilize the currency's value, says Grinberg.

The currency also faces potential regulatory uncertainty. Earlier this year, the Treasury Department's Financial Crimes Enforcement Network, or FinCEN, issued guidance saying that virtual currency exchanges would have to register as money service businesses. The DHS also in May shut down activity between popular Bitcoin exchange Mt. Gox and Dwolla, a Bitcoin payment processing service. More regulation could also limit Bitcoin's usage and value.

The bottom line is that the future of Bitcoin is anything but certain – and far less stable than that of the dollar or most other established currencies, making the currency a potentially profitable – but also risky – vehicle for investors and charities alike. Gallippi says she is mindful of these concerns but insists the foundation is bullish on the future of Bitcoin.

"[Bitcoin volatility] is not a concern, but it is something I'm aware of, and I think everyone who's in the Bitcoin space is aware of," she says. "The idea here is that we all see a lot of promise, and the community is behind the benefits Bitcoin provides. We think it's here to stay."