I agree that bitcoin needs to be backed by something... an economy.

The definition of a 'fiat' currency is one that can be used to pay taxes.

One day perhaps it could happen (who knows!) but the same principle applies regardless. You have to be able to buy stuff with it. And you can. So that way it is 'backed' by very real capital.

The only thing we need to get the bitcoin economy moving is price stability.

Things that I think would help improve price stability are:

• Broader distribution of the coins in circulation (more consumers, fewer speculators).
• A higher value in exchange for fiat currencies (harder to move the market).

So everything seems on track, it's just going to take time.