A report on the Financial Times noted that despite the astronomical rise of Bitcoin on the market today, investors should learn from the history of e-currency.

The article highlighted an older version of Bitcoin, which was e-gold. In 1999, the same news site dubbed the e-gold as "the only electronic currency that has achieved critical mass on the web". Investors opened 4 million accounts on the Web with a total of over USD60 million in deposits and had been hedged against million of dollars and around 4 metric tons of precious metal in one day. E-gold founder and Florida-based oncologist and economic history buff Douglas Jackson had hoped then that the electronic currency backed by gold will be the new base currency. Jackson also thought that e-gold will be able to rival flawed flat currencies.

Like Bitcoin, e-gold was used as the preferred mode of currency by drug dealers and hackers. On December 2005, both the US FBI and Secret Service raided his offices and slapped him with charges on aiding money laundering and running an unlicensed money transmitter business.

Jackson responded with a flat-out no after being asked by FT if he has ideas on which virtual currencies since e-gold could hold promise. Moreover, Jackson said e-gold's downfall was the absence of regulation. "It had things backwards. Permissions would be restricted or revoked reactively in the event unusual activity was detected. It was great at finding bad guys after they did something," Jackson said.

Financial regulators, like the US Treasury were quick to caution businesses who adopt Bitcoin and other virtual currencies as alternative payments to comply regulations that involve identity checks, suspicious activity vigilance and account monitoring.

In a latest client note, Promontory consultant Adam Shapiro said, "It appears many digital-currency firms may have underestimated their regulatory obligations, the anti-money laundering risks presented by their business models and the degree of law-enforcement concern surrounding those risks."