Comment Useful properties for payment, not investment (Score 1) 595
The purpose of bitcoin isn't to hold coins for investment, but to use them for transactions, because they have useful properties for anonymousish internet payment that other payment processing systems don't have. Except for a few silly applications, transactions aren't priced in Bitcoins, they're priced in dollars or Euros or RMB or whatever, and you buy $x worth of Bitcoins on an exchange, use them to order easily shipped illegal pharmaceuticals or send money to your parents back in the old country, and the recipient sells them back on an exchange to get ~$x of locally useful currency.
You're not buying Bitcoins to hold them until they appreciate or the latest bubble bursts or the pyramid crashes, you're buying them to use for half an hour for a transaction, and they're almost always stable enough that any price fluctuation is within your tolerance for money transmission service fees (i.e. hopefully cheaper than Western Union, possibly competitive with Paypal, and certainly much smaller than the 90% markup the dealer is getting for a sheet of LSD or the 50% markup they're making on other drugs, and even if it's more expensive than Visa, the lack of record-keeping is a feature, not a bug.) And yes, if you're using it for illegal transactions, the lack of record-keeping is also a risk, because your dealer might not actually ship you the products, but you're probably only buying a $100 retail quantity, or if you're buying more you can structure it as multiple phases so you don't pay for the third 25% chunk until you've received the second one. And it wasn't like the credit card $50 loss limit was going to reimburse you if your sheet of "psychedelic artwork" arrived but didn't actually have any acid in it.