Hold it, retort Bitcoin’s defenders. The standard “bubble” analogy distorts Bitcoin’s technology and potential.

It won’t replace the dollar or the euro, says Brito of the Mercatus Center. Instead, Bitcoin represents a payments technology that competes with Visa and PayPal. Against these, he says, Bitcoin has some huge theoretical advantages. Except for cash, most payment systems require a middleman (usually a bank) to move funds from the buyer’s account to the seller’s account. By contrast, buyers and sellers of bitcoins deal directly with each other. Bitcoins are deposited automatically in the seller’s electronic “wallet.” Savings could be sizable, Brito says.

Jeremy Allaire is chief executive of Circle Internet Financial, a start-up company striving to commercialize Bitcoin. With time, he thinks Bitcoin’s price volatility will subside or be hedged. He says that Bitcoin’s frantic trading is not just mindless speculation. “People are making a bet,” he says. The bet is that Bitcoin will emerge as a global payment platform operating through smartphones, tablets and other devices. If Bitcoin captures even a small share of the multitrillion-dollar global payment market, its current price will be dramatically undervalued, he says. There are now about 12 million bitcoins; the underlying software is supposed to stop production at 21 million.