If you had spent $100 on Bitcoin 10 years ago, it would now be worth around $50 million.

So what's going on?

Has someone really invented free money? (Spoiler alert: they haven't).

Bitcoin is money, just like dollars or pounds or yen are money - but it doesn't exist in physical form (there are no coins and notes). It is a digital currency, with accounts (who pays to whom) recorded in cyberspace. There is no overseer. Everything is hidden behind complicated electronic walls in a complicated electronic system.

Who owns each Bitcoin is recorded within the system but secretly. There is no central register. You can buy and sell Bitcoin with "real money" - dollars and cents -as though you were buying or selling a foreign currency. The price goes up and down.

Lots of types of money have no physical form. Not everything is cash. When you pay with a debit or credit card, no actual notes and coins are involved - but those transactions go through your bank. Bitcoin transactions don't. They are private.

There is no central authority creating it - no central bank.

Nobody knows who invented the system. The idea emerged in 2008 when a person using the pseudonym Satoshi Nakamoto imagined how people could make payments to each other anywhere without going through a bank.

A clever, unknown person or people created the platform. The amount of Bitcoin does increase through a computer generated system in which a puzzle is involved.

The best way to think of Bitcoin is as cash, according to Professor Rabee Tourky, Director of the Australian National University's Research School of Economics.

"It provides an ability to transact electronically as though you were exchanging paper money," he said.

Electronic cash has advantages and disadvantages for the holder, some of them legal and some of them illegal. The authorities don't know about transactions, for example, and those authorities might include the Australian Tax Office and the police.

But cash has a big draw-back: if you lose it, it's gone.

Stashing your cash under the bed means the ATO doesn't know about it (and you would be breaking the law if you didn't declare it, apart from depriving schools and hospitals of their revenue), but if there's a fire, try telling the insurance company that there was $100,000 in notes under the bed.

Similarly, if you forget the password for your Bitcoin account, the money's gone. The New York Times estimated that about a fifth of the existing 18.5 million Bitcoin (worth more than $140 billion) were lost to their owners. One man had forgotten the password which would unlock more than $220 million.

There are legitimate benefits with Bitcoin.

There are no bank fees. It's easier to pay someone far away than it is by sending cash through the post.

"You can buy a cup of coffee with cash," Professor Torky said, "but you can't buy drugs from Perth."

You may really value your privacy, and not trust banks with information. There may be legitimate transactions you want done secretly.

After the report by the Banking Royal Commission, lack of trust in banks rose, according to Professor Tourky.

At the same time, banks became much more inquisitive. "A lot of people worried about getting loans at that time and started doing transactions in cash so that banks wouldn't quiz them about their habits."

Professor Tourky calls the Bitcoin economy a "privacy economy", or the black market (though he doesn't like the term).

Think of two countries with two separate economies and currencies: the Australian economy in which we all live and the Bitcoin economy. There is an exchange rate between the two currencies, Bitcoin and the dollar.

That exchange rate goes up and down. If we want to use the Bitcoin economy more, the price of Bitcoin goes up.

Four months ago, Silk Road, an online market in drugs, the details from stolen credit card and even the services of hit men, was closed down by the police in the United States who seized 70,000 Bitcoin worth about a billion dollars in the real economy.

The price of Bitcoin fell.

In May, 2010, one Bitcoin would have cost you less than a cent. At 2.40 pm on Thursday, the price of a Bitcoin was 69,358.38 Australian Dollars. People have made a lot of money by buying hyper-cheap and then watched the price go stratospheric. You can exchange Bitcoin for cash in the real economy.

But this is a speculative, volatile market. It can crash.

Banks and the police don't like Bitcoin because it provides a way of avoiding taxes and the law.

Environmentalists don't like BitCoin because it uses up an immense amount of electricity. On one authoritative estimate, its computer use accounts for more than 0.5 per cent of global electricity consumption.

A lot of economists, including eight Nobel prize-winners, think the price is rising because of speculation - people buy Bitcoin because they think the price will rise, and that's fine until the bubble bursts. If you are caught with Bitcoin in the crash, you will be a lot poorer.

Under the headline "Bubble, Bubble, Fraud and Trouble", economics Nobel laureate, Paul Krugman, asked, "So, is Bitcoin a giant bubble that will end in grief?

"Yes," he answered his own question, "But it's a bubble wrapped in techno-mysticism inside a cocoon of libertarian ideology".