Bitcoin's story of one step forward, one step back

TO even the casual observer, the progress of bitcoin must occur in fits and starts. Every step towards mainstream adoption inevitably appears to be accompanied by a step away from it. This week alone, the bitcoin world heralds the opening of the first licensed bitcoin exchange in the United States, even as a bitcoin website in South-east Asia is charged with securities fraud.

Similarly, the virtual currency's price has gyrated as much as its fate. In the last 12 months, bitcoin has been worth anywhere from US$854 to US$177,…