It took quite a while. I wanna dye my hair again and make it pure blue but I may change my mind. Won't redye my hair for a while (cause I'm broke lol).

If bitcoin can be inflated by adding litecoin, it can be inflated by adding more currencies, thus the limited supply of bitcoin and all other currencies are destroyed. The result of this would be catastrophic since unlimited supply means value will go to $0. There is no reason to pay for something with unlimited supply. The fact that price is going up indicates that people have confidence that this won't happen and I believe the reason so few have chosen to support litecoin through merchant integration is because it's not in their own interest to do so. I think the only reason litecoiners want to see it integrated anywhere is for a quick buck.

With a market cap of 12 billion i'm pretty confident any "major bitcoin failure" can be overcome. However this isn't a topic about whether litecoin serves a purpose, just that money is leaking out from the btc economy due to irrationality.

Hopefully it will be used for everyday payments to in a couple of years, otherwise the everyday user would not have any real use of it!

Problem is though that everybody I hear about it speaks on it as an investment opportunity. If nobody sees it as something to pay groceries with, the bubble will burst soon enough as it is actually useless.

No one in their right mind is going to use BTC as a currency as long as they expect the value to keep rising. Why spend something now that might be worth 100x as much next year... 
You know your cash will be worth less this time next year, thats the incentive to spend it.

Your argument relies on the postulate that Bitcoin is going to become a global standard. There isn't anything coercing the world economy into adopting Bitcoin. On the other hand, "those with a big stash of the old currency" already have enough wealth that they could prevent Bitcoin's widespread adoption.

Just don't forget this is all a commodity market, this recent uptick in price says nothing in regards to increased merchant adoption, increased transactions, etc.  So while this pricing level is supported, the only thing supporting it is the excitement of all the new folks piling on.  There are a lot of people who are buying at > $200 who will be pretty miffed if a walrus drops a bunch of coin and they lose the sparkle in their eye for the epic rise of BTC.  Same thing happened in April, huge excitement and then people were digging graves for BTC a few weeks after they hopped on board.  Now we're here again with no apparent reason short of excitement.  And excitement always gets corrected.

Or to be more specific, excitement is awesome for the folks who are holding, but for many there is a point where the financial reality outweighs the "moon" potential and the desire to cash out sinks in.  Net result is either whales get larger or new buyers "luck out" and "buy in cheap".  Reality is that after a while folks aren't going to want to purchase mBTC amounts because the cost of ownership or adoption is too high without any real benefit, i.e., there isn't much you can buy with BTC and everyone out there still pegs BTC against an actual fiat value for any physical purchase, so the BTC price will always be an "exchange" value for what the real price is.  So in that case, why jump on board for your $260USD/1BTC with exchange and transfer values attached if you could instead take your $260 and go directly to *any* store to make a purchase? 

BTC has not proven itself as a currency, and like previous boom/bust cycles there is a theoretical wall for adoption because there are only so many people who will "buy in" to the market.  The alternative, sadly, is we see a massive consolidation of BTC into very few hands, leading to the same problems we see in the current global economy.  And then people move on so that the whales can have a whale party and everyone else finds something not corrupted by the influx of massive amounts of fiat and the dreams being sold.