If youve ever wondered what cryptocurrencies such as bitcoin, litecoin and ethereum are for, ask one of their legions of techie-libertarian fans.

And its dollars to dogecoins (yet another one) that the conversation will go something like this:

You: So whats the purpose of bitcoin?

Fan: The technology is absolutely amazing!

You: Yes, but whats it for?

Fan: Really, the blockchain technology is a total masterpiece, way ahead of its time!

You: Yes, yes, I understand that. But what is it actually for?

Fan: You dont understand! Its a completely decentralized money system! Totally revolutionary!

You: Honestly, does it have a purpose? Any purpose at all?

Fan: Its the wave of the future!

And on it will go.

$100 billion market

Cryptocurrencies, or cyber currencies, which have been in a massive financial mania until their sudden sell-off this week, have two actual uses: online gambling and money laundering. Neither is the heart of a major business model. But thats it.

And these, preposterously, are the fundamentals behind a mania that has driven these currencies up 30-fold, so that today in aggregate the market for them is a staggering $100 billion.

None of the defenders other arguments stack up.

Online currencies are hardly a store of value when they have fallen about 30% in a week.

Are they really protections against the ravages of inflation and monetary debasement imposed by wicked governments? If so, how come people who keep their money in bitcoin and ethereum and the like have experienced Weimar Republic levels of consumer price inflation just this week?

That is, after all, what it means when the price of your currency plunges. Bitcoins arent just down 30% against the dollar in the past week. Theyre down 30% against the potato, the sack of rice, the gallon of gasoline and the new car.

Pure speculation

Admittedly, before this the price of these cyber currencies had skyrocketed. Those who got in at the start of the year have turned $1 into $30. But this looks more like a speculation than a currency. And what will tomorrow bring? I have a pretty good idea how many potatoes I can buy with my dollars next week. Bitcoins? Good luck with that.

You notice, incidentally, that these bitcoiners continue to measure the market price of their beloved new currencies in terms of, er, old-fashioned U.S. dollars.

Cyber currencies may make online purchasing and international money transfers marginally more efficient in theory, but hardly in practice. Would you risk moving your money from dollars into bitcoins just to save a few percent in transaction fees? Youve seen that wiped out many times over this week just in price fluctuations.

Competition from all sides

Bitcoin, the grandaddy of them all, might at one point have claimed value as a unique entity. If it had a monopoly of the people who wanted to use a cryptocurrency so they could play online poker or finance international crime, it had some worth. Yet in the past few years, multiple competitors have erupted. There are now 25 with individual market values above $100 million, several above $1 billion. Yet all the bitcoins in the world are still valued at around $40 billion.

Fast-growing rival ethereum was worth bupkis at the start of the year. Today its valued at $31 billion, or almost 10 times as much as the company ESRT, -0.61% that owns the Empire State Building.

Preposterous? You make the call.

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Opinion: Stay away from bitcoin it's complete garbage - MarketWatch