As you've noted, Bitcoin is a digital currency used to pay for a variety of goods and services. In many ways, it works the same as paper money with some key differences. Although physical forms of Bitcoin exist, the currency's primary form is data so you trade it online, peer to peer, using wallet software or an online service. When you actually have some of the currency, you can then use it to purchase anything that accepts it. In some cases, Bitcoin is the only accepted form of payment and you'll have to acquire it in order to complete a transaction. You can pretty much purchase anything with bitcoin. There are people who sell their houses for bitcoin! Popular online services like Namecheap, WordPress, Reddit and Flattr that accept bitcoin. 


Bitcoin possess the quality of your current currency (INR, dollar, GBP etc.) and can be used to practically purchase anything. Businesses are now accepting bitcoin as a mainstream currency in their normal day to day trade. 


Bitcoin can also be used as a speculative investment just like gold, shares, stocks and currency exchanges as the rates of bitcoin do fluctuate and profits can be made in exchanges.**


Note: ** Please note that while using bitcoin as speculative investment, you will need to do so at your own risk.