Bitcoin passes $500 mark for the first time

Bitcoin passes $500 mark

Creative Commons image by BTC Keychain

UPDATE: Since the time of writing, the price of one Bitcoin has surpassed $750.

Bitcoin is soaring. The crypto-currency hit the $500 mark for the first time on Sunday – a fifty fold increase in 12 months, according to CoinDesk.

Just a couple weeks ago, you could buy one bitcoin (BTC) for about $250.

There are currently just over 12 million bitcoins in existence, with a total market cap of $5,581,140,286 according to the bitcoin Price Index.

Fans of the crypto-currency see the price rise as a testament to the bitcoin's resiliency and its legitimacy as a store of value.

In fact, just this week for the first time ever, a mining company fulfilled a transaction using bitcoins.

Despite many setbacks – including an FBI raid of Silk Road, an online black market that used bitcoins – the currency's "value never fell," CoinDesk writes.

"Nearly every piece of bad news about individual cases heralded more expectations that bitcoin would pay the price. That it has continued to rise despite these setbacks could well be feeding back and pushing values even higher, as investors sense bitcoin is a more resilient asset than previously thought."

The Winklevoss twins recently chimed in with their words of encouragement, calling the bitcoin 'Gold 2.0.' And they would know – the two have made millions on their bitcoin investment after buying at $9 per BTC.

But with such drastic upwards movement, critics are increasingly calling the bitcoin's success a bubble.

Peter Schiff of Europe Pacific Capital recently told CNBC that a lot of people are buying BTCs because they think the price will go up.

"And the price probably will go up, and it will keep going up until it implodes," he said.

"I don't see bitcoins as an alternative to gold," Schiff noted. "It's no better than a fiat currency."

Garrick Hileman, economics historian at the London School of Economics told CoinDesk that it's too early to tell if this is a bubble. He says that growing media attention and scrutiny from regulators are contributing to the hype, but that if bitcoin wants to go mainstream, it's going to need more regulation.

“The lack of legal clarity is arguably the single most important issue facing bitcoin right now," Hileman told CoinDesk. "For example, banks are scared of bitcoin, and reluctance by banks to work with the growing bitcoin ecosystem is a significant barrier to wider adoption."