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> It's only purpose is to allow you to buy other stuff.

There is certainly utility in being able to buy stuff that cannot easily be bought with traditional (government) currencies. Namely, things that are illegal in various countries, like drugs or gambling.

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That's the "use it to buy things" which isn't utility. The laptop I'm typing on will not be worth more later. Ever. This very second is as much as it'll be worth, which is perhaps half of what I bought it for a year and a half ago. But I bought it, because I need a laptop. I fully expect it to be continually worth less, just like the couch I'm sitting on, the watch I'm wearing, the table I keep the laptop on, etc. But I put up with that because I'm using them. Bitcoins are useful for these things, but that's not utility - you don't buy a bitcoin and (supposing they dropped heavily in value year after year) shrugged and said "Oh well, I need this bitcoin for this so I'm keeping it even if I get very little in return for it in five years when I craigslist it as '1 used bitcoin, still in pretty good shape'".

You're saying that drugs cannot easily be bought with government-issued cash? It's totally the other way around: drugs are easily and frequently bought using cash, and vanishingly rarely bought with bitcoins.

I would consider the Silk Road to be fairly large. Obviously, it's tiny relative to the entire USD drug market, but bitcoin is also tiny relative to USD. But the point is, you simply cannot deny that there is actual demand for bitcoins caused by the fact that the Silk Road only uses bitcoin.

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