The bitcoin casino is open again.BN-LC615_bitcoi_M_20151104182823

The price of the digital currency has climbed as much as 50% this week, re-creating scenes from a manic 2013 run that took it from $13 to a high of $1,100 before it crashed.

The burst of speculative buying followed a spate of positive publicity and a move by the European Union to define bitcoin as a currency and not a commodity.

The hype and volatility around bitcoin, however, is overshadowing an uptick in more sober consideration of how its underlying technology—a sort of decentralized register of transactions—could be applied to traditional finance.

Bitcoin traded as high as $492 on Wednesday, well below its record but up about 50% from last Friday’s closing price. It fell back to roughly $430 in the afternoon.

The thinly traded market is prone to volatility, but before these sharp swings, bitcoin was having a quiet year, with the price ranging between $200 and $250.

“It’s the herd mentality,” said Bobby Lee, CEO of Shanghai-based exchange BTCC. “It’s true in this as in anything, whether it’s tulips or gold.”

Bitcoin is an odd concept—a currency not issued by any government or central bank, but instead existing on a decentralized network of computers around the world. Transactions to buy and sell bitcoin are entered in an open ledger that is quickly verified and updated.

That ledger system is called the blockchain. Venture capitalists and Wall Street banks have been investing in the technology, betting it could more efficiently and securely handle things like settlements of securities transactions or cross-border payments.

That perceived potential landed blockchain on the covers of major magazines last month.

In October, the European Union’s Court of Justice ruled bitcoin should be treated like a currency rather that a commodity for tax purposes. The decision means bitcoin wouldn’t be subject to value-added taxes.

The stance is at odds with a ruling by the Internal Revenue Service that bitcoin is property, not currency, but in line with the approach taken by the U.K. and increases the odds that bitcoin can develop as a “genuine alternative” currency, said Richard Asquith, vice president at tax-compliance firm Avalara.

People continue to be obsessed by the currency itself, however.

In 2013, most bitcoin trading was handled by a single exchange, Mt. Gox. The Toyko-based startup was notoriously fragile and collapsed in early 2014.

There now are several exchanges across Europe, Asia and North America. The most recent is Gemini, a New York-based exchange launched in October by Tyler and Cameron Winklevoss.

There is a bitcoin exchange traded fund on the market, Bitcoin Investment Trust; the Winklevoss twins are preparing to launch another.

Exchanges like Tera Exchange offer bitcoin derivatives, and others offer hedging products as well.

“We believe bitcoin and its associated blockchain technology have the potential to disrupt the existing financial infrastructure over the next several years,” said Gil Luria, a Wedbush analyst who was one of the first on the Street to take an interest in bitcoin, “and believe the value of the bitcoin currency will benefit from this trend.”

He put a 12-month, $600 price target on bitcoin.

The number of total daily transactions in bitcoin has risen steadily since 2013, averaging about 125,000 a day in 2015, compared with fewer than 50,000 in 2013.

Bitcoin is still a thin market. Even with the recent surge, its total market capitalization is less than $7 billion. There are only about 14.8 million bitcoins currently circulating.

The fresh interest is creating new demand, for the same tight supply.

Asian trading, mainly coming from China, accounts for a big part of the recent surge. Trading volumes at the main China-based exchanges— BTCC, OKCoin and Huobi— have exploded, leading to some speculation that Chinese nationals are using bitcoin as a way to escape newly imposed capital controls.

BTCC’s Mr. Lee disagrees. Chinese trading in bitcoin is notoriously speculative, and Mr. Lee thinks the recent surge is just traders riding the wave of positive media.