Hello Bharel,

Speculation on Bitcoin value only is one of the major systematical risks to the future success of Bitcoin. Bitcoins should become a transaction enabler, not an investment on it's own!

In October 2012 the European Central Bank published a report concluding that the true impact of Bitcoins will largely depend on the number of active users, as well as the number of merchants willing to accept the virtual currency for real transactions. Here they are hitting the nail on the head.

The number of Bitcoins in circulation cannot be altered like with fiat currencies; the growth of the number of Bitcoins is mathematically determined by the mining algorithm. Since the gross domestic product equals the money supply times its rate of turnover — something economists call velocity — this means that if the money supply is unchanged the G.D.P. can only grow with a higher velocity.

Because of the rising value of Bitcoins, without a rising velocity, the risk grows of Bitcoins being treated as an investment object instead of a transaction enabler. If the number of transactions with the real economy doesn’t grow, the G.D.P. of Bitcoins doesn’t either, and does the system indeed represents a pyramid scheme.

Inge

You can read my point of view on "How to Get the Bitcoins Moving" at bitcoinpeople.blogspot.com