Ie, they are only backed by faith. A lot of things are rare, it doesn’t make them currency. At least though, most rare things are tangible. Bitcoins aren’t. Heck, even if you strip the monetary value of a dollar, it has some value as paper. Bitcoins are just blips of data in the ether.
While we would be much better off with a currency whose supply only expanded gradually (if at all), bitcoin is a ponzi scheme, through and through. If bitcoins are holding their value, and the dollar isn’t, why in the world would anyone spend a bitcoin? The only way bitcoin takes off is the official currencies become worthless, in which case sellers would simply refuse transactions outside of bitcoin. However, in such a scenario, the government would shut down bitcoin, even if it meant inspecting every packet that traverses the internet.
Bitcoin is an interesting idea, but it has no path in which it becomes anything other than a niche currency (possibly for things like micro-payments). I hate saying this, because embracing a currency scheme not built around perpetual inflation would be such an enormous benefit. But bitcoin isn’t the answer, unless the question is “what is the latest ponzi scheme?”.
So are Treasury Certificates. The Fed quit printing them years ago.
Bitcoins are blips of data but so is most of our money. At least Bitcoins are less easily manipulated than “electronic” U.S. dollars are.