I was brought up in the tradition that only Gold/Silver is real money and that Fiat is currency. Yes, Gold and Silver have intrinsic value but then I came upon Bitcoin which made me rethink what money is. What I do know is that Bitcoin has value because (1) it's extremely useful and (2) it's scarce. It's exchanged by hundreds of thousands of people and it's accepted as a form of payment by thousands of merchants.
Bitcoin challenges the perceptions people have about money. In the next 5-10 years we will see if this grand experiment will work. The only reason it will fail is if it's too good as a replacement for the dollar which would threaten a lot of powerful people.
Bitcoin, like any other currency, is something that has a value. The US Dollar is nothing but a piece of paper, but it has value in the US because people can trade things for it. Bitcoin is the same as a US Dollar, only it is decentralized, anonymous, uses the metric system to express it's value (except for satoshize, a satoshi is the smallest amount of BTC you can have), and has a quickly growing community in sites like whiskchat.Com, kbve.Com, coinchat.Org and in faucets (basically free money in small amounts as long as you fill in a little captcha) like devfaucet.Com and others. Bitcoin is as real as any other currency, I could sell dirt for an iPad, and in fact know people who have gotten rich off of selling dirt! It's all about what one person wants, and what another person has.
Yes, Bitcoin is real money. You can use it to purchases goods and services. For example, Bitmit lets you buy goods for Bitcoin in an Ebay-style auction. Bitcoin has a total market capitalization far in excess of 1 billion U.S. Dollars. In other words, the Bitcoin market cap is greater than the whole GDP of the following countries!!!!: Samoa, Dominica, Saint Kitts and Nevis, Comoros, Tonga. Bitcoin is real money!
It is virtual, meaning, not physically existing as such but made to appear to do so.
Bitcoin will not crash like a stock or commodity, bitcoin will crash like your computer does. When Silver crashed in price it still existed. All be it at a new price. When Bitcoin crashes it will cease to exist. It is not a durable currency.