LEIGH SALES, PRESENTER: Now if you're anything like me, you may have heard of or read about Bitcoin and been mystified as to what it is and how it works. It's basically a global digital currency that's meant to be an easy way for people to transfer money without being governed by a central authority.

But Bitcoin's attracted its fair share of negative publicity. It was in the news again this week, linked to the huge online drug market and the death of a young Sydney man. Critics also claim it's too complicated for everyday use and that its value fluctuates erratically.

Consumer Affairs reporter Amy Bainbridge has the story.

AMY BAINBRIDGE, REPORTER: The virtual currency of Bitcoin might exist entirely in cyber space but it has a very real presence at this Melbourne car manufacturer.

DAVID BRIM, TOMCAR CEO & CO-FOUNDER: I only really decided to use it when I discovered that we could actually pay our suppliers overseas with it.

AMY BAINBRIDGE: In the risky world of staying afloat in the car market, this Melbourne business is looking for any edge it can.

DAVID BRIM: Here, this is the sub-assembly for the whole shop, but there are components inside here that we purchased from Israel using Bitcoin.

AMY BAINBRIDGE: Bitcoins are traded on the Internet between people directly, cutting out the middle man, banks. Tomcar is bucking a national trend by making its all-terrain vehicles here in Australia, selling exclusively online to customers that include farmers, the military and emergency services.

DAVID BRIM: We've sold a number of parts to customers in New Zealand who have paid us in Bitcoin and we've also sold merchandise, hats and T-shirts, overseas to Canada and America. We haven't sold a car yet on Bitcoin, but at the moment it's 24 Bitcoins for a Tomcar.

AMY BAINBRIDGE: The reason the company took to Bitcoin is simple, cost.

DAVID BRIM: We purchase parts from Israel in Bitcoin and we only pay a one per cent fee, so it's a fantastic way of transferring money and purchasing parts around the world.

So we've saved easily 50 grand and that money can go into R and D and customer service and all of that kind of stuff.

AMY BAINBRIDGE: Bitcoins were launched in the wake of the global financial crisis in 2009 by a mysterious computer programmer who goes under the pseudonym Satoshi Nakamoto. The virtual currency is controlled and stored entirely by computers spread across the Internet and is completely independent of any governmental authority.

JAMES CROFT, EDITOR, RECKONER.COM.AU: They're created by mining, which is running a piece of software on computers that crunch as very complicated algorithm and periodically awards Bitcoins.

AMY BAINBRIDGE: In one of the first known Bitcoin transaction, one Bitcoin was reportedly worth six US cents. Since then its value has increased dramatically. Last year the value of a single Bitcoin smashed through the thousand US-dollar barrier and was briefly worth more than gold and it's since fluctuated wildly as its use on the open market has expanded.

This small Melbourne organic fruit and veg delivery business receives payment for five of its orders each week in Bitcoins.

CHRIS MCLOUGHLIN, EARTH & SKY ORGANICS: Bitcoin seems to have a pretty wide appeal. We've had customers from young techy teenagers all the way through to semiretired baby boomers in their 50s.

AMY BAINBRIDGE: Orders for Chris McLachlan's food exist entirely in cyber space and so too does some of the money paid for his produce.

CHRIS MCLOUGHLIN: A large mix box this week was .04 of a Bitcoin or somewhere thereabouts. It's quite volatile so it shifts day to day. I think the first box that was purchased with a Bitcoin was about a quarter of a Bitcoin.

ASSOC. PROF. DAVID GLANCE, CENTRE FOR SOFTWARE PRACTICE, UWA: The price is very volatile so it represents a risk like any other investment.

AMY BAINBRIDGE: David Glance from the University of WA thinks hard currency is safer than the virtual kind.

ASSOC. PROF. DAVID GLANCE: There are a couple of thing that people need to be concerned about, so one is where you store your Bitcoins if you buy them. People who have kept them online in digital wallets online in certain sites have been hacked and certain exchanges have gone out of business and people have lost Bitcoins that way.

AMY BAINBRIDGE: Businesses know it's not safe to hold on to Bitcoins, instead using a merchant to convert the payment to real dollars.

CHRIS MCLOUGHLIN: We probably couldn't afford the risk in terms of the degree of volatility, if it dropped by half the next day which it has done before, then we'd have only received half the money for the produce that we've paid normal price for.

DAVID BRIM: We decided if we were going to do this Bitcoin thing we mustn't get distracted. We make all-terrain vehicles, that's what we do. We don't hedge Bitcoins. We're not in that business.

AMY BAINBRIDGE: Another drawback is that Bitcoin is complicated for newcomers to buy into as 7:30 found out. The simplest way to buy Bitcoins is going online and creating a free wallet to store virtual coins.

(Amy Bainbridge setting up Bitcoin account on her phone)

And create account.

One way to buy Bitcoins is using Melbourne's first Bitcoin machine. It's one of just two nationwide.

(Dale Dickens showing Amy Bainbridge how to use a Bitcoin machine)

DALE DICKINS, BITCOIN MACHINE OWNER: This is the easiest way on the planet to get Bitcoins. You press start and then scan your QR code on the screen, that's it and insert a note.

AMY BAINBRIDGE: This machine is owned by Bitcoin enthusiast Dale Dickens.

DALE DICKINS: I see it becoming a lot more user friendly and accessible to people that don't have access to banks and remittance, international remittance for people that want to transfer fund overseas. That's greatest calling card for Bitcoin.

(Amy Bainbridge ordering at a cafe)

AMY BAINBRIDGE: Hi could I grab a chai and a muffin?

There is just a handful of real-world places where you can actually spend your Bitcoins.

CAFE STAFF: Any second now it should go. See, this is the bug we run into. So what it's done is rounded off that last 0.00044.

AMY BAINBRIDGE: So you're tipping me for shopping here?

CAFE STAFF: Yes.

AMY BAINBRIDGE: The owners of this cafe in St Kilda decided to get onboard with Bitcoin.

SIMON RIGG, CAFE IMBISS25: It's like people are upset with the banks or they are feeling powerless, whatever it is, you know, is this another way to start to chip away at that power structure? I don't know. But I don't mind being involved in that.

AMY BAINBRIDGE: Hot on Bitcoin's tail, alternative virtual currencies are already cropping up.

JAMES CROFT: We're seeing an explosion of them and the vast majority of them are junk. They're not worth anything at the moment. But the reason that they're being created is that very slight chance that they might be worth something in the future is incentive enough for people to get in on the ground floor.

AMY BAINBRIDGE: So far that incentive has paid off for Bitcoin investors, but the wild variations in its value mean while there is money to be made, the is also money to be lost in a currency that is solely controlled by the whim of the market.

SIMON RIGG: As it goes along it will become more stable, but then I'm fascinated by like ok, what's the government and the banks going to do about it, because if it really starts to impact on their bottom line - if enough people are trading in it and saying, "I will give you $20 worth or 20milli Bitcoins worth of such and such," then it's currency and it's real.

LEIGH SALES: Amy Bainbridge reporting.