Hi,
It sounds like this is in a non-English speaking country. At least in many Western countries such as the US (in theory - the socialist authoritarians with help from proto-fascists who want to force people to buy products etc don't like freedom too much) we have a government of enumerated powers, not enumerated liberties. Just because something isn't specifically allowed, doesn't mean it is illegal. So bitcoin per se is not illegal. Some *uses* could be, for example purchasing drugs online.
The rest just sounds like a teacher who knows very little about economics and is anti-freedom among other things. He should google the purchasing power of major currencies over the past 110 years - even the past 20 years - and see how much inflation rots away the value of a euro, yen or dollar. Then ask himself if he would use that as a store of value when its value is inflated away.
As far as silver goes, a US silver dime ($0.10 face value) from 1964 is worth about 16 times its face value (~ $1.60) today. If he considers that to be "stable" he doesn't know the meaning of stable.
Five days ago, a friend of mine studying Economics at High School had a discussion with its teacher, regarding Bitcoin, since I told her about that. Here's what the teacher said :
1. That's illegal : He did not bring many proves here, just saying that since it has not been regulated as a currency, we were in a grey area, and something in a grey area is rarely something that will become totally white from one day to another. He added that the sole purpose of that was to buy all kind of drugs over the Internet.
2. It will crash : He said that he had studied Bitcoin's price evolution throught the time (what I doubt) and said her that being so constantly rising was a sign that it was not a viable project. Its proof : manipulated prices of things like silver or wheat are very stable !
3. Anyone clear in its head wouldn't use it : First, he doesn't recognise any kind of manipulation of the money and the danger that there is for people keeping all their savings in fiat. I know that because I had him as a teacher too some times ago. So trying to explaining him about the fact that there is a clear war against cash and evident facts, like that that shows our money need to be converted into something viable to be protected from massive surveillance, is useless. Him not understanding that, since its the best argument I have, I couldn't have replied. When she told him about the speed of transactions, he replied "we have PayPal", so I said me that it wasn't worth to ever try explaining anything. As a final point, he said again that the sole real use that is making standing apart is that you can buy drugs on the Internet...
4. Bitcoin at a bigger scale would fail : I couldn't explain you much what he said because what she told me wasn't very clear so I personnally did not understood, as her I presume how confuse her explaination was. To summarize, he said that it's still a little market and that it will fail to scale and will go back to close to nothing in value.
I'd like to get your feelings on that. Just call the arguments 1, 2, 3 and 4 and tell me what you would have replied back and what it does inspire you !