In the report, titled “All About Bitcoin,” the researchers write that they examined multiple views of the digital currency by people inside and outside of Goldman Sachs.

“So where does that leave us? With the conclusion that Bitcoin likely can’t work as a currency, but some sense that the ledger-based technology that underlies it could hold promise,” the report said.

Bitcoin emerged from source code written by an anonymous developer or group of developers using the name Satoshi Nakamoto in 2009, and attracted a following motivated in part by the ability to escape the strictures of traditional currency, notably government control. The report by Goldman Sachs lends credibility to the virtual currency, said Michael Terpin, co-founder of BitAngels, a group of angel investors in early stage Bitcoin startups.

“The tone overall is conservative and measured,” Terpin said of the report. “People will read it and draw their own conclusions. It’s nice they are paying attention to it, and don’t have a Bitcoin-is-evil view.”

Biggest Hurdle

Dominic Wilson and Jose Ursua, the researchers at Goldman Sachs who wrote the report, said that the ability to pay for goods and services using Bitcoin is growing, saying that “obstacles to Bitcoin being used more broadly in the payments system are arguably not insurmountable.”

Roman Leal, an analyst at Goldman Sachs covering information-technology services, said Bitcoin’s “biggest hurdle” will be maintaining its cost advantage in the face of greater regulation, higher operating costs, and competition from entrenched players.

“While it is too early to tell how banks and payment processors will react to the threat of Bitcoin, we believe that it is only a matter of time before major incumbents develop a digital currency strategy,” Leal wrote.