Recent weeks have been exciting for a relatively new kind of currency speculator. In just three weeks, the total value of a unique new digital currency called Bitcoin has jumped four times, to over $40 million.

Bitcoin is underwritten not by a government, but by a clever cryptographic scheme.

For now, little can be bought with bitcoins, and the new currency is still a long way from competing with the dollar. But this explainer lays out what Bitcoin is, why it matters, and what needs to happen for it to succeed.