If we are talking about the purpose of Bitcoin, we should remember the context of its inception and the message encrypted in the genesis block:
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"
This was probably intended to comment on the instability caused by fractional-reserve banking and to provide people with another option: peer-to-peer cash.
This is in fact extremely ironic. The banking crisis of 2007-2008 was NOT caused by any failure of the fiat currency system. It was caused by reckless speculation of financial institutions on "virtual assets" ... not any quirks in the issuing of fiat money, as can be seen by the relative price stability of most fiat currency in that period.
Jajajaja ... it's totally ironic. I think it provides people with another option. Andreas Antonopolis told a story in an interview about how he convinced his mother to put all of her money into Bitcoin in 2011. She finally did. Shortly after, the government took 20% from everyone's bank accounts. There is nothing wrong with fiat currencies, except politics, and that's also true with Bitcoin.
Now, as a reaction to that, bitcoin's creator invented an asset, bitcoin, that has a severe deflationary spiral built into it, and hence is entirely designed to be a heavily speculative asset (as is observed in reality), exactly of the same kind as the kind of hollow derivatives speculation that caused the crisis.
Do you think maybe it was to mimic gold, as some have suggested? Perhaps it was to say "DON'T PRINT MONEY TO BAIL OUT BANKS!" We'll never know [hopefully] and that's the fun part. Probably some of both.
That said, bitcoin did pave the way for a "freedom currency", that would allow people to win back their economic freedom, from law, state and tax. So the fact that a freedom currency could exist, is an interesting aspect of bitcoin. However, in my opinion, it contains too many fatal design flaws to become such a large scale currency (if even there's a demand for it) ; but for a smaller community of people, it can have this usage on occasions even though its overall design makes it into a speculative asset.
Yes. That is true. I never thought about Silk Road.
It will be interesting to see where it goes. It has a lot of benefits by being the first, but other currencies are able to adapt. DASH has seen the Bitcoin scaling debate and built it into their Masternode. They also have 100 DASH limit to vote. ETH is exploring proof of stake, which is a flaw with BTC; people can say all they want without having a dime invested and it takes time to distinguish on these sites.
I don't think Bitcoin will go away. I think it's great, but I am diversifying my portfolio (along with many others) and am mostly interested in LiteCoin and DASH. Having said that, I think any cryptocurrency that has a public blockchain can be legitimate and competes with BTC. If it's an internal blockchain, then, it probably has less value. I'm thinking Ripple.