Bitcoin, although it is completely digital, it functions similarly to the credit cards and online banking networks used everyday. Bitcoin can be used, where accepted, to pay online and brick-and-mortar stores just like any other form of currency.
Bitcoins can be exchanged in physical form using a Casascius coin.  These coins are embedded with digital bitcoins and a ‘key’ that enables the user to send them directly to their bitcoin wallet. However, paying using a mobile phone or computer is way more convenient.  Putting bitcoin into an actual physical form defeats the entire purpose.
Bitcoin balances are stored in a large distributed network, and they cannot be fraudulently altered by anybody. In other words, Bitcoin users have exclusive control over their funds, and bitcoins cannot vanish just because they are virtual.  The fear most people have – and one I shared until I educated myself – is that your bitcoins could become hacked or stolen, as we’ve all heard about in the news. There are two different concerns: hack (an exploit of the system) or theft (stolen or lost possession).
The infamous MtGox 2011 bitcoin hack occurred when an attacker with a Hong Kong IP address compromised an account on the MtGox site and a massive number of bitcoins were stolen. Later the thief filled the market with those stolen bitcoins and the value of a single Bitcoin dropped.  The hackers themselves didn’t make a profit at all; their attempts to withdraw the stolen money was stopped by MtGox’s $1000 per day withdrawal limit. Ironically, this incident actually proves bitcoins are neither unreal nor immaterial, but rather “non-physical” with a value.