It’s Bitcoin-madness today.

On the same day the U.S. government began discussions about Bitcoin, the value of the digital currency is skyrocketing.

Bitcoin’s value hit $900 on Mt. Gox exchange around 5 p.m. PST Monday, up more than 70 percent from Sunday’s close and setting an all-time high in the process. But, it also just dropped to $650 within the past 30 minutes, highlighting the current volatility of Bitcoin. The value of Bitcoin only hit $400 for the first time last week, and $500 for the first time on Sunday.

Today’s spike is likely due to The Department of Justice noting that Bitcoins can be “legal means of exchange,” and U.S. Federal Reserve chairman Ben Bernanke writing that Bitcoin “may hold long-term promise,” even though he said the Federal Reserve has no plans to regulate Bitcoin.

If you aren’t familiar with Bitcoin, it’s the emerging decentralized, virtual currency gaining popularity lately in light of the FBI shutting down Silk Road, the online marketplace for illegal drugs and illicit services. Bitcoins exist only online, can be transferred right away and are not controlled by a central authority like the Federal Reserve.

We recently wrote about a Seattle grilled cheese foodtruck that is now accepting Bitcoin and also noted how the world’s first Bitcoin ATM was just installed in Vancouver, B.C.

Up to this point, it’s been unclear how or if governments will try to regulate the system. But today’s news certainly indicates some hope for those in favor of digital currency.

Here’s a good place to learn more about Bitcoin and how it works.

Update, 6:25 p.m. PST:

Now, Bitcoin is trading at around $770 an hour after dropping from $900 to nearly $600. Madness!