Also, Even though Bitcoin cant be destroyed in a physical sense, it can still be completely devalued by litigation. The US has shown they are serious about anti-gambling and if this starts taking off, they simply need to go after the exchanges. Making it hard to buy bitcoins = BTC value goes down. Making it hard to sell (remember when pokerstars was shutdown? Everyone withdrew everything from ALL sites) and the value goes down catastrophically fast.
Basically, all it takes to completely devalue bitcoins is to have one event that makes most bitcoin owners think the amount of time they have to cash out is minimal.
How do you think the market would react if mtgox had a 'megaupload' style moment? It doesn't even have to be realistic- The US gov could just say terrorists might be using it to funnel funds or something.
But anyways, If mtgox was raided or taken down (and please don't say its not possible- Its totally possible) the effects on the market would be massive and instantaneous. When megaupload was taken down, all its competitors shut down out of fear as well. Its likely that would happen in this situation in a similar fashion.
There is no intrinsic value in bitcoins unless it is possible to easily trade them with a outcome of receiving capital. Yes you can trade bitcoins for services, but the person giving you services is not going to do that unless HE can get cash from this. People are not going to trade services/items to each other in a giant circle if the value of the currency is not hinged on a dollar amount.
I think the pro-bitcoin line to counter what I am saying is that someday people wont care if it converts into USD, because bitcoins will be more valuable. Its not totally bullshit- The USD is no more 'real' than a bitcoin, with the exception of it being established and backed by our gov. However, I doubt BTC would ever get gov backing, so it will eternally be at risk.