[A]re bitcoin and competing cryptocurrencies really currencies? Let's think about what a currency is:

A currency is a unit of account. Cryptocurrencies qualify, as they can measure the value of other goods and services.

A currency is a medium of exchange. I'd give cryptocurrencies a qualified yes on this point. Currently, only a limited number of vendors globally accept cryptocurrencies, and recent volatility will only discourage increased adoption.

A currency is a store of value. Bitcoin is not. Its price volatility undermines its adoption, as fewer vendors will accept a currency whose value can fluctuate so dramatically. The prices of newer currencies have been similarly volatile.

Let's call the verdict on the currency question mixed. Even if cryptocurrencies qualify for niche purposes, their prospects seem dubious.

The greatest threat is central banks, which have begun to research blockchain-based currencies and impose regulations on exchanges. Given the additional control and policy effectiveness that digital currencies could provide, central banks have good reason to adopt digital currencies in the coming decades. Those currencies would be "legal tender," legally recognized forms of payment for all debts and charges.

If the choice were between bitcoin or a blockchain-based dollar, which would you rather have in your digital wallet?