When I saw Bitcoin trading at close to 1,000 dollars, I wanted to kick myself! I should have seen it coming, a limited supply and a lot of hype and demand — it looks obvious in hindsight, as many things do.

And I can't excuse myself by claiming not to have been fully aware of Bitcoin, when it was trading far below ten dollars. My well-known libertarian leanings meant that a number of like-minded friends encouraged me to get involved in this new, non-statist, unregulated experiment. Shame  on me, for not listening. I hope at least they made a lot of money.

The main reason, however, I did not get involved was longer-term concerns about the viability of Bitcoin, and in my view, those concerns still remain.

Bitcoin has been in the news a lot lately — and not all of it positive, such as the recent arrest of a Bitcoin trader in New York on money laundering charges.

I think Bitcoin has made a mistake by keeping its owners anonymous, although some users — including some highly undesirable ones — are embracing it for that very reason. This offers authorities an excellent excuse to ban it whenever, and wherever they wish. And this could easily be an unfair ban under false pretences simply because the authorities don't like the competition. China and Russia are just the first to react, I fear.

Due to the nature of its structure, banning Bitcoin will of course not eradicate it. But what it will do is make it impossible for law-abiding individuals and businesses to use it — and thereby render it practically useless anyway. So the false sense of security the, admittedly, irrepressible network provides Bitcoin will really not count for much, if there is a concerted move to restrict the Bitcoin market.

I think therefore that it may well be advisable to accept and embrace some degree of regulation, although it will be counter-intuitive to many fans, if only to prevent an even worse reaction from governments that are not pleased to see their money printing monopoly challenged.

Of course, for early buyers wiser than me, the huge price rally has been terrific, but it also carries some negative consequences. I  think the elevated price and huge volatility — it has swung from a high of $1,242 in late November to around $500 in hours — will make it more difficult to gain acceptance among serious businesses.

So I think Bitcoin will face serious challenges in the long run, although I believe such digital currencies could have a place in the economy in more well thought-through structures with values better linked to real assets. There is no doubt that many central banks have made a mess of things with their own fiat money without linkage to reality, and it is entirely conceivable that the private sector could also in the area of currencies do a better job than public sector institutions. It does in pretty much every other area under the sun, so why not here?

Anything in the financial space that can be regulated will be regulated. Get used to it! This will also apply to digital currencies. But regulation could be their ticket to real acceptance and success — and should therefore not be seen only as a negative.

Bitcoin is still a very small part of the economic system and will not pose a serious threat to more established models any time soon. But if it does one day and it overcomes regulatory issues, it will be embraced.

Bitcoin is increasingly used by migrant workers to transfer money back home, and is therefore beginning to serve really genuine purposes, not just ideological ones, which is promising to see.

The extreme volatility and opaque ownership structure definitely poses a risk to all users of Bitcoin. And I believe there will be new and better models developing over time. It is rare that the first mover wins and takes all, and given the weaknesses mentioned above, I believe there is a lot of room for improvements.

There are at least 80 known similar initiatives out there, and of course most of them will fail. But I know personally of a couple of projects in the design phase that in my view are better constructions, and will be able to obtain rapid distribution, making them real competitors to Bitcoin. When they launch, I promise myself that I will be less cautious!