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Bitcoin May Be in a 'Bubble' but It Can Also Buy You a Tesla Model S

A Tesla S electric car sold for Bitcoins by a Lamborghini dealer in Newport Beach, California

What can you buy with bitcoins? Wine-flavored lollipops? Custom leather watch bands? Or how about ... a Tesla (TSLA) Model S?

A Lamborghini dealership in Costa Mesa, California, says it just sold a Tesla Motors Model S for bitcoins and will accept the virtual currency for any future car purchases.

“Bitcoin, a fully encrypted and fully digital currency, has been used by a recent client of ours to pay for a Tesla Model S Performance we had in our inventory," the Lamborghini Newport Beach dealership posted on its website. “That's right, an electronic currency was used to purchased a fully electric vehicle.”

The dealership didn’t identify the buyer or price tag on the electric car, likely left over from a trade in by an earlier Lambo buyer. A new Tesla Model S starts at $62,400. With bitcoins trading at $1,052 on the Mt.Gox Exchange Thursday, it would take about 59 bitcoins to grab a new electronic ride.

The currency's rise from a few cents each back in 2010 to over $1,000 has fueled more large purchases than just this one. For example, back in October, we saw headlines on a 27-year-old Norwegian man who bought a flat in Oslo with bitcoin profits generated from an initial investment of less than $30. But in that case, he had to actually exchange the coins to kroner. It's notable that the Newport Beach dealership accepted the bitcoins on their own merit.

There have been few other big-item vendors that have done this, although Virgin Galactic did announce it would accept bitcoin for its space flights going forward, and a Hawaiian flight attendant was reportedly the first to bite.

The value of a bitcoin has fluctuated wildly this year, rising from $20 at the beginning of the year to $140 in October to more than $1,200 at the beginning of December. News this week that Chinese authorities would not allow the country’s banks to deal in bitcoin sent the currency price tumbling back down to $1,000. Former Fed chief Alan Greenspan also said the cryptocurrency is in a "bubble,"  an idea that has been debated as bitcoin's value has inflated.

But car dealers and other commercial vendors can ignore the price swings because bitcoins can be so easily and quickly converted back into dollars.