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Some basics about money (currency).
It has basically two functions: 1. A medium of exchange, and 2. A store of value.
For it to function as a medium of exchange, it needs to be widely accepted. This is why nations mandate their currency for use in the nation, and often restrict others. But in border areas and travel hubs, it is often easy to get other national currencies accepted (for example, it is pretty easy to spend USD in many Canadian cities, and CDN in northern US cities).
For it to function as a store of value, it must be reasonably stable over the storage time. Gold and silver coins were good at this for long periods; the USD has been pretty good too. In hyperinflationary periods, the affected currency loses its ability to store value for more than a few minutes. Most currencies are not pegged to any commodity, and thus their value is determined by the economic conditions in the issuing country (mainly inflation) versus the rest of the world (or at least major currencies).
So Bitcoin and other cyber currencies. As they get more broadly accepted, they achieve the medium of exchange. They can only hold on to this by continued acceptance which means political pressure and financial institution pressures to restrict them matter. They will also lose acceptance if their value continues to be highly volatile unless they can be very quickly transferred into a fiat currency.
Cyber currencies are not tied to any other store of value, and their production is limited, so to the extent there is demand, they can be a store of value (or even a speculative investment). However, without being a fiat (national) currency, that could crumble very quickly.
For the reasons hinted at above, I think they are speculative assets and not really currencies/money. I personally wouldn’t invest in them long term, but like other commodities would consider trading them if that was my bag. I’m neither smart enough nor fast enough to be confident with a trading strategy for commodities including all currencies and cyber currencies. That doesn’t mean they won’t go up in value - I don’t know. It just means the risks are beyond my skill set.
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