The death knell is sounding for Bitcoin. Again.

Following its meteoric rise last December and the harrowing fall just a month later, Bitcoin seemed to find its feet again in February. It surged back from a low of $6,000 (Dh22,068) to almost $12,000, although its second coming was cold comfort to those who bought in at its peak of nearly $20,000. For the past two weeks however, the cryptocurrency has been on another downward trend. It’s currently hovering about $8,000, but some are predicting a drop to around $2,800.

Is Bitcoin destined to fail completely? No, but for it to have any chance to survive, investors need to stop treating it like a commodity. Paypal co-founder Peter Thiel recently contended that Bitcoin is the equivalent of online gold. It isn’t. Bitcoin is and always was a currency. Investor’s inability to treat it like one is partly to blame for the December bubble.

Bitcoin has none of the characteristics of a commodity. It has no inherent value. There is no physical component that can be influenced by the laws of supply and demand. The only thing to give Bitcoin any value is people’s belief in its future usability as a currency, but its rapid rise in value killed its ability to act as such. No one was going to spend a Bitcoin if the possibility existed that it could be worth an additional $500 just 30 minutes later.

At the height of Bitcoin-mania, even greater swings could be seen, which led to a number of major governments and agencies refusing to accept it.

Hopefully, after the speculative buyers leave the markets and take their get-rich-quick mentality with them, Bitcoin can return to use as a currency, but that will require stability. Considering that swings in the value of major currencies by more than 1 per cent usually cause headlines, Bitcoin is still far too volatile.

Unfortunately, new technology often carries with it the ability to be used in unforeseen ways.

But Blockchain, the underlying technology on which cryptocurrencies operates, is still a viable platform for a digital payment system. Whether that system will be Bitcoin, Etherium or some other yet-to-be-developed crypto is still to be seen.

But the fall of Bitcoin should be a lesson for the future. Hopefully, going forward, people will keep their heads about digital currencies and use them for what they were intended.