When the Bitcoin cryptocurrency reached its greatest levels of hype starting in 2011 and continuing through its 2013 valuation peak, its most ardent supporters hailed its appeal to investors and even claimed its potential to usurp and replace traditional, government-backed currency. Predictably, those assertions didn't make too many elected officials in Washington happy, even as such forecasts of a commandeering of fiat currency were fantastical and ill-reasoned.

Eventually, the cryptocurrency that was so loved in part due to its unregulated nature was weakened by hackings of prominent exchanges and connections to illicit activities on the "deep web" and black markets.

But the currency is still around, trading at about $239 on Sept. 28 for one Bitcoin, down more than $1,000 from its peak value of $1,242 in late November 2013, but about on par with its value for most of 2015.

More importantly for its long-term sustainability than its value as a commodity is that Bitcoin is beginning to be treated by governments as more of a financial service and payment system as opposed to a competitor to fiat money.

On Sept. 22, New York state granted its first "BitLicense" to Boston-based Circle Internet Financial Inc., which runs a mobile payment service thanks to venture capital backing from Goldman Sachs. The license helps give the currency consumer protections and legitimacy that its Wild West peaks of two years ago couldn't offer.

"Putting in place rules of the road that help protect consumers from loss or theft and root out illicit activity is vital to building trust in this new financial technology," said Anthony J. Albanese of the New York Department of Financial Services, the regulatory entity that granted the license.

The fact that the first official license comes from New York is an interesting development, given that Sen. Chuck Schumer (D-N.Y.) has been one of the foremost critics of Bitcoin over the years.

The license awarded to Circle is by no means an exclusive one — 22 companies applied for a BitLicense, and more are to be handed out soon. Additionally, the federal Commodity Futures Trading Commission (CFTC) recently ruled earlier in September that Bitcoin and other virtual currencies are officially commodities, and will come under similar regulations as better-known commodities like crude oil.

"CFTC asserts its authority to provide oversight of the trading of cryptocurrency futures and options, which will now be subject to the agency's regulations," Bloomberg Business writes of the decision. "In the event of wrongdoing, such as futures manipulation, the CFTC will be able to bring charges against bad actors."

Unsurprisingly, those who operate companies in the Bitcoin space were recently optimistic about its future at the TechCrunch Disrupt conference in San Francisco, citing the quality of the technology backing the cryptocurrency. While pure “free-market” cryptocurrency may be a thing of the past, steps such as the BitLicense and the CFTC's ruling should ensure that above-board firms are making inroads with its reach.

However, not everyone is convinced by the new rules, as some companies opted not to file for the BitLicense due to application costs and technological disagreements. Others view the CFTC decision as a precursor to high federal taxation.

It's becoming increasingly clear that both those who predicted Bitcoin as the new dominant world currency and those who predicted its immediate demise after its precipitous value drop were both massively wrong.

Even though sending someone Bitcoins online isn't going to pop to most people's minds when paying for something, the currency is accepted by an estimated 100,000 merchants worldwide. With the global payments industry valued at $1.7 trillion, there's plenty of space for Bitcoin to operate, and under the law.