Ty Danco, a former money manager who is now CEO of currency trading services firm BuysideFX, is beginning to believe in the bitcoin after initial skepticism.

In a commentary on Tabb Forum, he lists four requirements for the digital currency to succeed.

1. Clear regulation

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Regulators must be involved to give the currency credibility, probably the Commodity Futures Trading Commission, Danco explains. "Early signs from regulators are more promising than I initially expected, but we still have a long way to go."

2. A) More adult supervision, and B) Big endorsements

The bitcoin community needs to bring in more professionals to run things, he says. "I can't see Prudential Insurance, Vanguard or the Monetary Authority of Singapore trusting their assets with these kids."

While some esteemed venture capitalists already are backing bitcoin, "we need one or two mammoth banks like JPMorgan or Deutsche Bank to come onboard," Danco writes.

3. Establishing two-way transactions and delivery vs. payment (DVP)

DVP requires that payment for goods and services be made at the same time that those goods and services are delivered.

4. A clearer identity

"Bitcoin requires optional and verifiable identity opt-ins," Danco argues.

"I clearly see how the bitcoin protocol — combining a public, distributed ledger utilizing advances in open-source software, cryptography, P2P [peer to peer] processing and digital signatures — is capable of straightening out our current labyrinth of inconsistent regulation, inefficient payment processing and legacy back-office practices."

Edward Hadas, Reuters Breakingviews economics editor, has a much bleaker view of the currency. Bitcoin is doomed by the lack of government involvement, he writes.

"Legal tender has the backing of the issuing state. The government has a proprietary interest in maintaining a reliable currency. It also has the necessary powers to do so. It can regulate lending institutions, pursue fraud and create new money to keep the system afloat," Hadas says.

"Bitcoin has none of that protection."

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