Popular digital currency bitcoin is expected to overtake e-commerce giant eBay's payment processor PayPal in terms of US dollar transactions in the near future.

California-based hedge fund Laureate Trust says that bitcoin is fast establishing itself as the currency to use globally and instantly to make purchases or payments over the internet recording nearly $300m (£178m, €220m) daily in transactions.

"Whenever you have an instrument that trades over 300 million US dollars a day, it must be recognized," Peter Tasca, CEO of Laureate Trust, said in a statement.

"The digital currency works, Bitcoin has greater volume transactions than Western Union and we anticipate it will overtake PayPal later this year."

PayPal processes payments totalling $315.3m every day, according to Statistic Brain.

"In the next one or two years, Bitcoin can surpass the dollar transaction volumes of other established payment companies including Discover, and even American Express, MasterCard, and Visa," said SmartMetric CEO Chaya Hendrick.

Bitcoin was launched in 2008 and is traded within a global network of computers. They can be transferred without going through banks or clearing houses, reducing fees involved in the services significantly.

The number of retailers who accept the digital currency as payment option has been increasing, as it gained more in terms of popularity and value. Its value peaked at $1,250 in November 2013, but declined below $300 after troubles such as the collapse of exchange MtGox and crackdown on the currency in China.

Bitcoin is trading at $520.52 as at 7:47 am BST, according to Coindesk.

Laureate expects the price to increase by 50% in the near term, as it becomes more popular for transactions.

Laureate manages a $5bn fund with investments in trade stocks, bonds and option contracts in over 100 regulated market exchanges.

In February, the hedge fund issued a "speculative" buy rating on bitcoin after the digital currency had survived two crashes causing a 70% drop in value within a few months.

In a filing with the US Securities and Exchanges Commission (SEC), eBay earlier regarded bitcoin as a "potential competitor" to PayPal. While PayPal charges a 2-3% fee for processing transactions, payments using bitcoin could be done with negligible fees.

John Donahoe, CEO of eBay, earlier said that he is actively considering an integration of bitcoin with PayPal. EBay still does not accept bitcoin or other digital currencies for payments.