Virtual currency bitcoin soared to an all-time high above $10,000 yesterday on major exchanges and digital currency indexes, including the widely followed Luxembourg-based trading platform BitStamp.

Created in 2009, bitcoin uses encryption and a blockchain database that enables the fast and anonymous transfer of funds outside of a traditional centralised payment system.

It has increased more than tenfold in value so far this year, posting the largest gain of all asset classes, amid increased institutional demand for crypto-currencies as financial and mainstream use has expanded.

But sceptics say it a classic speculative bubble with no relation to real financial market activity or the economy, most famously JPMorgan boss Jamie Dimon who labelled it a fraud.

The price rise is a continuation of a long-term trend

Bitcoin crossed $10,000 on smaller exchanges such as the CEX.IO exchange and the crypto-currency index coinmarketcap.com long before it hit the milestone on BitStamp.

“The price rise is a continuation of a long-term trend which has been driven by the speculative activity in Japan and also with institutional investors dipping their toes into the cryptocurrency market,” said Thomas Glucksmann, head of marketing at Hong Kong exchange Gatecoin.

“The recent surge is just part of that additional element of excitement among speculative traders and a growing contingent of liquid traders that have a long-term optimistic view on… this technology.”

Sol Lederer, blockchain director at US technology company Loomia, said this surge will help long-time bitcoiners finally feel vindicated that their currency, which had been ridiculed for years, was at last being taken seriously.

“Bitcoin’s future is still uncertain; it faces the same serious technical challenges it has for years and faces stiff competition from newer, more sophisticated blockchains. But even if it were to crash, it’s apparent that bitcoin is here to stay.”