For those of you who are wondering why Auroracoin came to a halt in Iceland, the answer is very simple.
...
there was no actual demand for them from normal Icelanders, and no way to spend them on anything useful?
There were a lot of buying and selling stuff in the beginning but this was mostly done through social media and no real way to realise the currency's value. That is why the exchange is so important. If merchants have the ability to convert aur into isk they would be more willing to accept aur as payment.