One of the first coins ever used as Australian domestic currency was this week sold for the U.S. equivalent of about $508,000, setting a new world record, the auctioneer said.

The price set a record for sales of the rare coin known as the "Holey Dollar," which was created in the early 1800s.

The auction was Wednesday in Melbourne, Australia, and the buyer was a private collector from the Australian state of Western Australia, according to a release from Coinworks, the dealer that handled the auction.

The coin was one of the finest specimens of Holey Dollars in existence, Belinda Downie, a numismatics expert and managing director of Coinworks, said in a release.

"This Holey Dollar was created from a Spanish Silver Dollar that had been minted at the Lima Mint in Peru in 1808," she said. "Only twenty of the 200 specimens held by private collectors have ties to the Lima Mint. And this is the absolute finest of them all."

The previous high sale for a Holey Dollar was made in 2011. The price was the U.S. equivalent of around $500,000.

In Photos: Expensive Items

According to Coinworks, the Holey Dollar was introduced in 1813 to alleviate a currency crisis in New South Wales, the fledgling colony that would later form part of the Commonwealth of Australia.

Gov. Lachlan Macquarie purchased 40,000 Spanish Silver Dollars, then had the coins altered to ensure they would not be taken out of the colony in payment for exports.

A circular disc was removed from the center of each coin and the remaining outer ring stamped with the year and New South Wales issuing authority. The coin's value was 5 shillings. The inner portion that was punched out of the coin was re-stamped and used as a 15-pence piece. It was called the 1813 Dump.

The coins were removed from circulation between 1826 and 1829 and melted for their silver.