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Bitbills, a physical representation of the virtual currency Bitcoin.NANCY PALMEIRI/The New York Times

The Bitcoin phenomenon is rapidly turning into a full-fledged mania.

The four-year-old digital currency, which was valued below 10 U.S. cents in mid-2010, climbed above $200 Tuesday and at one point reached $240. That's a huge jump from $13 at the start of the year.

The trigger is renewed worries about the future of the euro in the wake of the Cypriot crisis, the depreciating yen and the decline of the U.S. dollar as a reserve currency.

But speculators are also wading into the hot market in search of quick profits, prompting critics to warn that Bitcoins are not about to replace existing government-backed and issued currencies, and that the speculative wave will end as badly as previous market manias.

The price rise has been so meteoric that "it's at a point where it may be well beyond use as a means of exchange for goods and services," said Greg Moore, a currency strategist with TD Securities in Toronto.

"It's hard to see at this point how it becomes a very broadly used mode of exchange," he added.

Still, reports have surfaced that Bitcoin-related applications were among the most popular downloads in Spain and other troubled euro-zone countries when European officials began talking about taxing Cypriot bank deposits.

There is also news of a bar in New York accepting Bitcoins; an Albertan seeking to sell his house for them; and a person who traded his six-year-old Porsche for 300 Bitcoins.

"That was probably a smart move, if they get rid of their position fast enough," said Sébastien Galy, senior foreign exchange strategist with Société Générale in New York.

He likens the soaring market price to the Internet stock mania of the late 1990s, or Dutch tulip bulbs in the 1630s. In both cases, prices reached exorbitant levels before the market collapsed.

"People are saying: 'We all know it's a tulip bulb, but I might as well trade it and make some money out of it,'" Mr. Galy said of the Bitcoin fever.

The Bitcoin designers built a system with specific rules that limit the quantity of digital coinage in circulation and the total amount that will ever be made available.

What makes it different from other cyber-payment plans is that it allows the dollar value to float, adding volatility to scarcity.

"The market is efficiently, rationally, building a financial empire out of these rules," Mr. Galy said. "You could argue the supply rules are questionable, but people have been fairly well informed on what it is exactly."

On paper, Bitcoin is a cleverly designed virtual currency that promises to transform the way the world conducts digital transactions by removing foreign-exchange and credit-card costs and facilitating worldwide transfers.

But Bitcoin doesn't meet the standard requirements of a currency, such as the ability to pay debts and taxes and to be transferable through a payments system, said David DeRosa, president of DeRosa Research & Trading in New York.

"If I owe somebody $100, I can't show up with Bitcoins. What it is, is a quasi-precious metals store of value. And that's all it is," Mr. DeRosa said.

Still, it appears that Bitcoin has convinced thousands of people of its credibility.

Mt. Gox, a leading British Bitcoin exchange, said it added an average of 9,000 to 10,000 new accounts a month last year. "This number doubled in January, tripled in February, and sextupled in March."

And another 9,000 people are waiting to be approved for access to the trading platform, it said.

"You can think of Bitcoins like the suburbia of Toronto – with the crucial difference that the land isn't real, and the government steps in to limit the supply the more investors apply," Mr. Galy said.