Quote from: AyeYo on July 05, 2011, 01:04:04 AM

Quote from: 5grainsilver on July 05, 2011, 12:24:09 AM

And why the bitcoin value is entirely dependent on the black market.

It is simple supply and demand. Lets look at each side.

Supply:

Supplied by miners. Any serious operation NEEDS to sell to pay utilities. That creates a steady supply of bitcoins offered at market price on a regular basis.

That alone is what kills it at this point. Everyone is still using this a profit making game, which means all mined coins are getting sold off for market price.

Bottom line: almost no one wants Bitcoins for Bitcoin's sake. People want Bitcoins to sell for dollars now or later, or they want them to purchase illegal items. That's really all they're used for right now and it's unfortunate.

Yes, many new people are investing for this reason, but this isn't that bad. It gives Bitcoins a lot of press and attracts people who do want to use it.

A lot of non-internet merchants are popping up. There may only be ~10, some restaurant here, some cake shop there, but most of them just opened up, and others are bound to follow. I bet many local people will see the money saved on transactions and want to join in as well.

You can't ignore the legitimate vendors using it. A quick look at the marketplace on these forums here will show you how popular it is for legal, non-investment purposes. Being able to wire money without involving a bank, and all kinds of fees and wait times is very useful to a lot of people.