Longer term, both could become important components in an increasingly digital business world.
Presently, however, things are more like the infamous 17th-century Tulip Mania that sparked unbridled enthusiasm and caused large numbers of people to make what turned out to be misplaced investments.
When that mania subsided, some people had made a lot of money, but many more had lost the lot.
The problem for those 17th-century investors was that the tulips they were purchasing had no inherent value.
They could not be used to purchase other goods or services but only on-sold to someone else who was willing to pay a higher price.
The same holds true for bitcoin. The cryptocurrency cannot be used to purchase real-world items, but only sold to other investors.
This may change in the future, but at the moment the currency is effectively useless for real-world transactions.
There are also a rapidly growing number of alternative cryptocurrencies, each being promoted as a stellar investment that people should immediately back.
There's even one, dubbed bananacoin, that is apparently pegged to the export price of a kilogram of bananas in Laos!
The only reason people are investing in these things is because they believe they can buy today, sell tomorrow and make a profit.
Some people are taking this to the extreme and re-mortgaging their homes to invest in cryptocurrencies.
At this point, they would be better off taking that cash to a casino and putting it all on the black on a roulette table.
The idea that these currencies would take control away from banks hasn’t worked either.
There are various entities and individuals that control a significant proportion of all bitcoins, and they therefore control the currency in the same way as banks control real-world currencies.
Then there are the issues around the mining of new bitcoins. The system relies on computationally intensive cryptography to create new coins and each gets progressively harder to mine.
It is now the case that bitcoin miners can end up spending more on the electricity needed to power the computers they are using than the value of the coins they will create. It just doesn't make sense.
Beyond volatility
For bitcoin to ever become a useful currency in the real world, it is going to have to become much less volatile.
Any currency that shoots up in value quickly only to experience an equally sharp fall is not likely to attract many willing users.
People need to know that, if they accept a currency today in exchange for goods or services, it is going to be worth a similar amount in the weeks and months ahead.
Presently, bitcoin doesn’t offer this kind of stability because it remains firmly and squarely in bubble territory. Now, that’s not to say that it will remain there forever.
If values return to realistic levels and volatility subsides, it could become a useful alternative currency. However, as we look at things in early 2018, that time still appears to be a long way off.
The power of the blockchain
While it’s far from clear when, or indeed if, bitcoin will become a trusted and useful global currency, what is clear is that the technology underpinning it – the blockchain – has significant potential.
The blockchain is an irrefutable public ledger of all transactions that have occurred since a cryptocurrency was first released.
This ledger can be viewed by anyone and means that, once a transaction has occurred, it can never be questioned.
This concept of a public electronic ledger has potentially powerful applications in a range of other areas.
For example, the technology could be used to allow secure online elections where votes would be recorded and the result could not be altered.
Another application is in transactions such as property purchases. Each step in the purchase process could be recorded in a blockchain, removing the need for tedious paper trails and making eventual ownership irrefutable.
As the technology becomes more widely understood, further applications are likely to appear.
Its best use might not be to underpin a speculative digital currency, but it certainly has the potential to deliver big benefits to governments and businesses around the world.
Tread warily
It’s clearly still very early days for both blockchains and cryptocurrencies. Their shift from technical novelty into the public consciousness has caused wild waves of enthusiasm and a rush on investment dollars.
Anyone considering getting involved in the trend should tread warily and only invest funds that they can afford to lose.
Some people are predicting the price of a single bitcoin will reach $100,000, while others believe it will sink back into the hundreds of dollars.
There is clearly potential in the technology, but betting your house on it as a replacement currency with real-world potential is a step too far.
Phil Kernick is the co-founder and director of CQR Consulting.
