Bitcoin sign
Scanning the QR code on this sign will direct people to a bitcoin account where they can donate bitcoins. Imgur

Two top Wall Street banks opened coverage of digital currency bitcoin on Thursday, mulling its potential as a serious global currency.

Bank of America Merrill Lynch’s currency strategist David Woo published a report this morning, as did Citigroup Inc.’s (NYSE:C) foreign exchange specialist Steven Englander.

“As a medium of exchange, bitcoin has clear potential for growth, in our view,” wrote Woo. He cited its potential as a payment standard in e-commerce, adding it could become a “serious competitor” to traditional money transfer methods.

The digital currency fell to $870 from $1240 on Thursday morning, after the Chinese government revealed new bitcoin restrictions pertaining to banks.

The currency’s relative value to the U.S. dollar fell more than 20 percent, partly because its high valuation is based on its popularity in China. The new ban outlawed financial institutions from trading, underwriting or offering insurance in bitcoin.

Bitcoin’s 100 fold increase in prices this year could be signs of a bubble “running ahead of its fundamentals”, said Woo in his note. Still, the currency could become a store of value, with a reputation like silver, with a maximum market capitalization of $15 billion, if one bitcoin is worth $1300.

Citi’s strategist was more skeptical. He noted that bitcoin duplicates are easily made, which means that pricing the original Bitcoin becomes difficult.

“My conjecture is that we will see big speculative swings as different ‘coins’ are created and move in and out of fashion and some emerging concern that there is nothing to anchor them and nothing to stop their proliferation,” wrote Englander.

At least 54 bitcoin clones have appeared since April, with many soaring in value, according to Business Insider.

Edmund Moy, a former U.S. Mint director, noted to International Business Times in an email: “Bitcoin is actually more public than cash because each transaction is recorded in a central database.”

“Most of the other emerging digital currencies are based in China and Russia and Western governments are very suspicious of letting them into our financial systems,” he continued. Bitcoin can only succeed if it beats back its outlaw image, said Moy, who is currently a Morgan Gold strategist.

Bloomberg News quoted a China finance expert, who criticized bitcoin as “unofficial leakage to the current monetary system” which could be used for money laundering.