Can I go to the grocery store and hand the cashier some bitcoins to pay for my food?
Hand? Hard, but there used to exist some physical tokens one could pass around. Transfer? Sure, if the store accepts it. One could make the same argument for stocks/bonds as well, though. They're not directly useful to pay people.
You use money to buy goods and services.
And people have used, and continue to use, Bitcoin to buy goods and services. Either directly person to person, or from the range of companies that accept bitcoin and various other cryptocurrencies, directly or via payment processors.
People have used, and continue to use, gold and silver (physical metal) as a way to buy goods and services, though most grocery stores won't take them directly either.
Bitcoin is funny money and will disappear
12 years in, people are still insisting that it will go away, really soon, soooon, just wait for it, ignore the new highs indicating that there's pretty strong demand, wait for the correction, see, it'll disappear, er, just after this new high, and... any day now... waaaaait for it...
I'm comfortable saying that it will disappear at some point, heat death of the universe, end of the internet, or something of the sort, but... much like predictions about the end of the world, predictions of Bitcoin's demise seem rather overstated and have yet to come to pass.
It's not a wise long term investment
The people who put a lot of money into it back when it was at the "insane" top of $1000, assuming they've held most of it, are probably fine with their 25x returns in less than a decade. Even if you bought at the literal last peak, returns aren't half bad in a few years.
I'd consider it a bit more of a speculative value store than an investment, but... sure. What would you consider wiser? If one holds any sort of metals in their investment/value store collection, splitting some of the gains there in recent years into crypto would seem a halfway sane decision to me. The risk/reward balance is exceedingly aggressive, but there's a space for that in a sane and balanced portfolio.
Cash out now
What, you want in and can't find any for sale? :p
I think investing in bitcoin and cryptos is stupid though. You don't invest in money. You can gamble on currencies and to me that is what everyone into crypto is currently doing.
The various people making money on foreign currency fluctuations would probably disagree with you, and would probably assert, halfway reasonably, that if you're going in informed, it's not gambling. One could consider Bitcoin a contrarian position against "most or all current fiat currencies," betting that they'll be devalued in real terms over time. It's been a decent bet for a long while...
The last point I'd add is that gold and silver are exactly the same as bitcoin in so many ways. So if you are into gold and/or silver as part of your portfolio you could just use bitcoin. Personally I think investing in gold and/or silver is just as stupid.
"Investing" implies a hope for gains, and there are certainly some in gold/silver who hope for gains (though mostly this seems to be companies interested in selling you on the concept of "investing" with gold through them, in my experience...). However, there are also plenty who view them as a halfway stable value store. +/- 50% is fine, if you're looking to store some value through a currency collapse (of which there have been many within the lifetime of people alive today). Gold/silver have some value as industrial metals (silver, especially, doesn't get recycled nearly as aggressively as gold), and the history of the world would indicate they don't have a floor of 0, unlike Bitcoin, but as part of a blend of value stores and contrarian investments, I don't see a huge downside, and I certainly wouldn't call it "stupid" if done as a considered part of a portfolio. Gold/silver have some utility for local, in person transactions, Bitcoin has some utility for internet based transactions, so... *shrug* I don't get the hate, really.
I thought these applications first converted the bitcoin to dollars and transacted in dollars. Are they transacting directly in bitcoin now?
It depends on how the merchant has configured it. I've not looked into all of them, but for Bitpay, at least:
https://support.bitpay.com/hc/en-us/articles/201890513-What-are-my-options-for-settlement-BitPay offers direct settlement via bank deposit, so you can receive funds in your local currency, cryptocurrency, or a mix of the two.
...
BitPay supports settlement in 12 currencies and direct bank deposit in 37 countries. Cryptocurrency settlements are supported in over 200 countries.
Cryptocurrency - Bitcoin (BTC), Bitcoin Cash (BCH), Gemini Dollars (GUSD), Paxos (PAX), and USD Coin by CENTRE (USDC)
AUD - Australian Dollars
EUR - Euros
GBP - Pounds Sterling
MXN - Mexican Pesos
NZD - New Zealand Dollar
USD - US Dollars
ZAR - South African Rand
So, while the initial transaction is converted from your local currency to crypto, the details of the backend (if it remains as cryptocurrency, comes out as local currency, or some blend) is up to the merchant - if they support bitpay or another payment processor.
If it's coming directly off one of the debit/credit type cards, it's certainly being settled in your local currency, but there's a convenience of being able to use it at places that don't directly support cryptocurrences. I'm really not certain how most places are set up, though.