A new report from Bloomberg says that 2014 was a 'catastrophic year' for virtual currency Bitcoin. Bloomberg tracks 175 foreign-exchange values and ranks Bitcoin as the worst currency investment of last year. However, it is good to be able to report that those suffering the most from the increasing mistrust of the digital money and it's attendant collapse in value are currency speculators. Oh dear. How sad. Never mind.

The hype surrounding Bitcoin hit its peak some 13 months or so ago and that coincided with the digital currency's highest ever 'exchange' value of US$1,130. Since then it's been downhill all the way and the value of the Internet currency of choice for currency speculators the world over collapsed by 56 per cent in 2014 making it the worst performing currency of the year - and that includes the likes of the plummeting Russian rouble or the even more dismal performance of the Ukrainian Hryvnia. (Yes, at first reading I too thought the Hryvnia might be an animal, but it's not.)

As recently as a couple of years ago, virtual currencies were being touted in some quarters as the revolutionary pecuniary instrument that would put an end to "the scourge of inflation" for once and for all. Well, hyper-inflation is certainly a scourge, as the history of the 20th Century bloodily demonstrates, but is managed inflation really a curse or, as many economists believe, a powerful engine of economic growth?

Furthermore, proponents say, because virtual currencies are effectively stateless things, they will inevitably become de facto world currencies that will replace the US Dollar, the Pound Sterling, the Euro, the Won, the Yen, the Renminbi and all the rest of the currencies on the planet. As if.

Confidence in digital currencies, never particularly high to begin with, took a hammering in May 2013 when the Costa Rica-based centralised digital currency, Liberty Reserve, bit the dust. The company had described its service as  the "oldest, safest and most popular payment processor all around a world" but the site was seized and shut down by the US government on the grounds that it was insecure and overly attractive to criminal elements because fraud and money laundering activities were all but impossible to detect and not much effort had been expended by the company it attempting to detect them. The US authorities reckoned that by the time it was forcibly shut down Liberty Reserve had been used to rinse more than $6 billion of criminal proceeds.

Bitcoin has been in existence since 2009 and is different to Liberty Reserve in that it is not run by a central authority, the identities of users are (allegedly) known and the virtual currency is exchanged and traded on peer-to-peer networks. What's more, Bitcoin is a limited commodity. There are 22 million of them of which about 11 million are in circulation. This, claims the company, makes it a very good hedge against inflation.

Bitcoin claims to provide swash-buckling currency iconoclasts with a secure virtual value vault beyond the reach of governments,enforcement agencies, regulators, oversight, threats of confiscation or devaluation. The reality though is somewhat different and it should always be remembered that the value of a Bitcoin is completely and utterly notional - that notion could as easily value it at zero as at the $270 presently ascribed to it.

Bitcoin supporters point out that that the currency is in its earliest infancy and thus has not yet been given the stamps of credence and respectability conferred by important financial institutions such as the IMF or the World Bank but optimists believe it is only a matter of time before Bitcoin is recognised at a real alternative currency of great potential longevity.

The enthusiasts add that Bitcoin's inherent strength and appeal is the ease of its cross-border transferability and independence from nation state currencies and interventionist governments. What's more, proponents say that Bitcoin is unique in that it can't be counterfeited.

Regulators are finding it hard in getting to grips with policing virtual currencies but they are trying. Finance bodies in New York are attempting to construct a framework upon which various levels of regulation of Bitcoin could be hung but, to date, the proposals relate only to companies and organisations that actually transmit and transfer funds from one geographical location to another. The authorities seem to have given up completely on trying to devise a regime to regulate retailers that accept Bitcoin as payment for goods and services and the same applies to private individuals who invest in it. And, it must be said, a small but increasing number and variety of retailers and companies do accept Bitcoin as payment. They include Dell, Dish Network, Expedia, Microsoft, PayPal and Time magazine.

Pessimists (and quite a lot of economists and analysts are amongst them) reckon that Bitcoin is a flash-in-the-pan and is already on its last legs. The former chairman of the US Federal Reserve, Alan Greenspan, went on the record to call Bitcoin "a speculative bubble" and 2012 report by the European Central Bank said that is difficult "to assess whether or not the Bitcoin system actually works like a pyramid or Ponzi scheme." However, Eric Posner, a law professor at the University of Chicago took exception to that assessment. He wrote, "A real Ponzi scheme takes fraud; Bitcoin, by contrast, seems more like a collective delusion."

And last year the Australian economist,John Quiggin, stated with typical Antipodean candour, "Bitcoins will attain their true value of zero sooner or later", while only a couple of weeks ago, David Yermack, Professor of Finance at NYU Stern School of Business opined that "By November 2015 Bitcoin may be all but worthless."

You pays your virtual money and you takes your choice and chance. As Bitcoin speculators learned to their real cost. in 2014.