From Felix Salmon’s article about Bitcoin and digital currency more generally:
That said, credits in World of Warcraft are valuable enough that Chinese prison guards reportedly force convicts to perform monotonous tasks within the game for 12-hour stretches at a time, building up credits which can then be sold for many times the guards’ official salary.)
Perhaps more seriously, there is a great discussion of the relationship between a currency and commodity:
In reality, then, bitcoin doesn’t really behave like a currency at all. In terms of its market value, it looks much more like a highly-volatile commodity. That’s by design: bitcoins were created to be the most fungible commodity the world had ever seen – to the point at which they would effectively erase the distinction between a commodity and a currency.
But is that a good idea?
Dollars are a universally accepted unit of account: if something in the world has a price, it has a price in dollars. Dollars are not, on the other hand, physical commodities. The overwhelming majority of dollars in the world are deposited safely and electronically in banks: there’s something weird and self-defeating about the kind of people who keep their savings stuffed under the mattress. In Hollywood, if you show someone counting out huge sums of cash, that’s an easy way for the director to say that he’s a criminal.
Bitcoin was constructed to behave like a currency: it’s very easy to use bitcoins to pay for goods and services, especially if what you’re buying is in a different country. Right now, there’s literally no way to build a website selling some kind of service, and have a meaningful fraction of the world’s online population be able to pay you for that service. Bitcoin was designed to solve that problem; to be, in effect, thelingua franca of online commerce.
But it’s very hard to be a currency when you’re also a commodity, governed by rules of scarcity and subject to speculative attack. And it’s also very hard to be a currency – or even a commodity, for that matter – when you’re as smallas bitcoin is. Even now, at the top of a huge bubble, the total value of all the bitcoins in existence is the equivalent of about 2,000 standard gold bars– not remotely enough to revolutionize the global payments and currency systems as we know them. Given the choice between something old and solid, on the one hand, and something new and virtual, on the other, the market is still voting for the asset class which has proved its worth over millennia.