Peter Orszag is personally bearish on Bitcoin — but he still can make an economic case for it.

"Personally, I wouldn't be buying Bitcoin right now," Orszag, a former director of the White House's Office of Management and Budget and a current vice chairman of Citigroup (NYSE:C), said during a presentation on Wednesday.

That skepticism might be expected, given that Orszag's resume makes him a quintessential Washington/Wall Street establishment man. Despite some high-profile and vocal fans, Bitcoin is anything but establishment — and has drawn increasing scrutiny for its existence outside of any country's regulated monetary system.

But Orszag prefaced his dismissal with a moderate defense of the digital crypto-currency, which has become popular with everyone from hackers and financial journalists to Silicon Valley celebrities and the Winklevoss twins.

"What people don't understand, and I think what's crucial to understand, is that money is anything that people will accept as a medium of [exchange]. So the crucial part of money is, if I want a Diet Coke, I don't want to trade someone a Bloomberg column for a Diet Coke. That would be a very inefficient [system]," Orszag, who also writes for the financial news service's Bloomberg View opinion pages, said.

"There are lots of different things that can work as money. Digital money of the Bitcoin or other forms, it all depends on what people are willing to accept," he added. "So there are regulatory questions, but from an economics perspective, the key question is — is this a big network effect? … It's only if other people accept it as money that you're willing to accept it as money, and that remains to be seen, in part because so much depends on how everyone responds to that expectation."

Orszag was answering questions during an event hosted by The Atlantic in New York.