BofA: Bitcoin can become 'major means of payment' for e-commerce

Is Bitcoin already in a bubble?

Bitcoin has "clear potential for growth" and could become a major means of payment for online transactions and money transfers, a Bank of America analyst told CNBC on Thursday.

The digital currency could hit a market capitalization of $15 billion on its way to becoming similar to a store-of-value commodity like silver, David Woo said in a CNBC interview.

Woo, head of global rates and currencies research, spoke on CNBC's "Squawk on the Street" after writing BofA's first assessment of bitcoin. His note is a reflection of the attention the fledgling currency has received from investors—and government regulators. On Thursday, the People's Bank of China outlawed the country's banks from using it, leading some to cash in on their investments.

(Read more: Bitcoin crashes 20% on China clampdown fears)

Siegfried Layda | Getty Images

"At the end of the day, we've never seen anything like this before," Woo said of the growth of bitcoin. "You have to look at this from outside the box to get some kind of fair value notion. We think the market is very much in need of value assessment because otherwise you don't know how far this thing could go."

Woo valued an individual bitcoin at $1,300 at his maximum market capitalization. According to bitcoin exchange, prices were above $1,000 Thursday afternoon.

Woo said the estimated market capitalization was an "upper limit" on his bitcoin forecast, and would only happen if the digital currency crosses three thresholds: It becomes 10 percent of business-to-consumer online transactions, one of the top three means of money transfers and a commodity similar to silver.

Despite Beijing's move, Woo said bitcoin has immense growth potential in countries with strict regulations such as China.

(Read more: Meet 'Bitcoin Jesus,' a virtual currency millionaire)

"There's no question that bitcoin has some inherent risk," Woo said. "But I think we also need to recognize the fact that bitcoin does have a role to play in countries where its citizens face high taxes, capital controls or even high confiscation risk. This is why China has seen massive growing demand for bitcoins."

Woo played down fears that bitcoin could fuel an underground economy of illicit drugs and untraceable transactions. Bitcoins, which are complex lines of code, contains a built-in code that produces a digital—and public—footprint, he said.

(Read more: US grabs $3 millionworth of Bitcoins in Silk Road raid)

"From that point of view, I don't think bitcoin could become a big story in the criminal underworld," Woo said.

(Read more: Bitcoin's surge due to 'excess liquidity': Faber)

— By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street"