Everything you need to know about bitcoin

Tesla said last month it will soon accept bitcoin as payment for its vehicles, and disclosed it had purchased $1.5 billion in the cryptocurrency as part of its cash holdings. Meanwhile, Uber and Mastercard also said they plan to start accepting bitcoin. BNY Mellon and BlackRock are looking into bitcoin. And Jay Z and Twitter CEO Jack Dorsey announced they establishing a bitcoin development fund.

There is speculation that as more financial institutions invest in bitcoin, more companies will join. Some investors believe that it could be a good hedge against inflation and a weak dollar. The Federal Reserve cut interest rates in March 2020, severely weakening the US dollar and shooting up the price of bitcoin.

So if you've been ignoring bitcoin thinking it might just be a financial fad, now's the time to start paying attention. Here's what you need to know.

What is bitcoin?

Bitcoin is a cryptocurrency created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are anonymous and are made with no brokers or intermediaries.

You can't physically use bitcoin -- it's a digital currency. And it's decentralized, meaning that it isn't controlled by a bank or government.

At this very moment it can be used everywhere from Overstock.com to PayPal -- and that list is expanding quickly.

A lot of people also see bitcoin as a good investment. And that's certainly been true this week, considering that bitcoin surpassed $60,000 this week. In January, the cryptocurrency hit records of over $40,000.

Where can I bu Businey bitcoin?

Bitcoin is 100% digital. Marketplaces called "bitcoin exchanges" allow people to buy or sell bitcoins using different traditional currencies. Coinbase is a leading exchange, along with Coinmama, CEX.IO and Gemini.

Where do I keep my bitcoin?

Bitcoin is stored in a digital wallet, which is either on the cloud or your computer. It's like having a virtual bank account. But unlike bank accounts, stored bitcoin isn't insured by the FDIC.

Wait, what does Elon Musk have to do with this?

Elon Musk, CEO of Tesla and SpaceX, has a history of tweeting support for assets and sending their value soaring, and the world's richest man is very big bitcoin booster.

"I think [bitcoin] is on the verge of getting broad acceptance by conventional finance people," Musk said in a recent interview on the audio-only social app Clubhouse.

Not long after that he formalized Tesla's relationship with the crypto, the corporate announcements started flowing.

Is bitcoin safe?

The cryptocurrency is highly volatile, and therefore very risky. For example, in January bitcoin's value rose to $42,000, fell to $30,000, then rose again to $40,000 -- all in the course of one week.

And there some inherent dangers to a digital currency: A hacked server, a deleted file or a lost password could mean the funds are lost forever.

-— CNN's Paul R. La Monica, Chris Isidore, Tal Yellin and Hanna Ziady contributed to this report.