With apologies in advance for the wall of text, but you're asking important questions and I wanted to give thought out answers.
Maybe since I'm in the US, I see no use for the currencies here. Some have suggested they are good in 3rd world countries with failing government. I can see that, but also why not just use Euro or USD or something else that's physical? Not everyone has computer/internet access in these places.
Most people (even out in african villages practicing subsistence agriculture) has a cell phone with internet access, so this doesn't appear to be a particularly strong barrier to adoption. It's interesting to see how this is playing out right now in india which is still recovering from "demonetization" that really is forcing even the extremely poor in small villages to consider electronic payment methods instead of saving hard currency (many of them had their live savings savings wiped out by demonetization because it was stored as cash).
The advantages of something non-physical in countries with unstable governments/currencies are:
1) you can pay people without the two of you having to meet up (for example paying your cell phone bill) and all the other logistical benefits that are driving folks in the eurozone and USA towards more and more use of plastic (credit and debt cards) rather than physical currency.
2) non-physical currencies are more resistant to confiscation (or demonetization) than physical currencies
3) it's much easier for folks out of the country to send remittences back to their family in the unstable country without it being stolen somewhere during the transfer process.
Volatility is a huge negative. A currency whose purchasing power swings wildly is not useful. I wouldn't want to take part in a transaction where I don't know what I could buy with my money next week or next month.
This is a valid concern, but only if you're using the currency as a store of value, rather than a medium to facilitate exchange. Lots of companies that accept payments in bitcoins still have prices in dollars. They convert that price into an instantaneous price in bitcoins, get the bitcoins, and have them converted back to dollars all instantaneously.
Competition between various currencies makes it confusing which one to use. The barrier for entry is relatively low and new currencies continue to pop up. Will there be some consolidation where several big currencies will merge to form a super-currency and push out the others?
Based on the underlying technology I think a merger if multiple currencies is very unlikely. It is likely that (at most) only one or a few of the many currencies out there today will actually get widely adopted as a medium of exchange though.
I know Overstock now accepts bitcoin. That's pretty impressive as they are a huge company. Is this a sign of acceptance or a PR thing? I wonder how much revenue they've been collecting in Bitcoin and how long they hold it in that form. I expect they convert it to USD as part of the transaction so they are never exposed to the volatility (correct me if there's more info out there). Why would anyone use bitcoin at Overstock instead of anything else though? I would use my 2% credit card cash back card.
Also microsoft, newegg and various other large companies. Yes, as far as I know all the big companies that accept it generally convert to USD right away when they get paid.
The reason your credit card can afford to pay you 2% of each of your purchases is that they're charging overstock/microsoft/newegg more than 2% of your purchase price as a transaction free. So from the company's perspective they'd probably prefer you pay in bitcoin.
So I've done some basic research and I don't get it. What am I missing?
I guess that moving money around with conventional approaches (other than handing people a big pile of cash) is currently slow (takes days to weeks to clear), sometimes risky (more on this below), and everyone involved tends to take a slice of the pie. This tends to be shielded from the consumer, but you start to run into it as soon as you try to accept money in any form other than a paycheck from a W-2 employer.
Take a look at this whole thread about the logistics of getting paid for a used car without being defrauded:
https://forum.mrmoneymustache.com/ask-a-mustachian/accepting-checks-for-car-sale-prevent-bounced-check/Or read some of the horror stories about what can happen with paypal when folks reverse charges, or the company decides to freeze your account or sudden decides to keep 35% of every transaction:
https://www.reddit.com/r/paypal/comments/6lhxme/what_happens_when_you_pay_paypal_15k_in_fees/Or about how international charities are running into problems getting funding out to their operations to prevent people from starving or freezing in winter because of banking regulations meant to prevent fraud:
https://www.economist.com/news/international/21724803-charities-and-poor-migrants-are-among-hardest-hit-crackdown-financial-crime-meansOr more pragmatically, consider that every time you swipe your 2% credit card (or order something online) you're giving the person or company on the other side of that transaction all the information they need to steal your account. And you have to trust them not only not to steal your account but to properly secure that information so that no one else does:
https://en.wikipedia.org/wiki/List_of_data_breachesNow that doesn't mean that cryptocurrencies are a good investment. It doesn't even mean that their technology has a better set of tradeoffs than the system we use now. I tend to think the answers to these are "I don't know" and "Yes, way better", but those are opinions, not facts. There there is an awful lot not to like about the way we currently handle moving money around, even in the USA.