Some people are "spending" it, but I would argue more people are "trading" it. Most of the current spending is mainly on gambling and drugs, so I would agree with the original post that the economy cannot progress if that continues to be the case. Any illegal sites will be more heavily targeted in the future, and you're already starting to see that now as cryptocurrency becomes more popular. BTC won't die off since you'll still have trading, but it will hit a price ceiling at some point where the vast majority of people simply won't be able to afford to buy and trade it anymore. 99% of us are speculators, and that's only fun when we're all making money. We all know a fall in demand will lead to a fall in prices. If there's minimal spending and less trading, that could be a long fall.

I know people are going to argue that it will always be affordable and speculators won't go away since you can buy .01 BTC or .000001 BTC or whatever, but that doesn't seem as appealing as buying 1 or 10 or 100 of something, especially to potential new users/"investors." I think we as a community need to start doing a better job of thinking of ways to maintain and grow BTC long-term instead of focusing solely on short-term profits.