There are a couple of reasons why the bubble is sure to burst. The first is just that it’s a bubble, and any chart which looks like the one at the top of this post is bound to end in tears at some point.
And here is when i stopped reading your lovely wall of text.
I mean saying "bitcoin is a bubble because it's a bubble" doesn't sound promising for the rest of your text...
If it looks like a duck, smells like a duck, sounds like a duck, acts like a duck, then we can assume, that by all means, it is a duck.
The reason the current prices in bitcoin can be called a bubble is due to the following facts:
The chart looks like a bubble. All charts that looked like this in the past have ended up looking like this one:
http://3.bp.blogspot.com/-qZ1HEWG3GHE/TVvKCodj1HI/AAAAAAAAFPo/h4LGbgEYElI/s1600/20.+%2527%2527TIME+-+TULIPOMANIA%2527%2527%252C+olio+su+tela+%2528100x150%2529+2011+.jpgThe current valuation of bitcoin was born solely out of speculative demand, as opposed to legitimate use as a currency.
A huge percentage of aforementioned speculative demand stems from increased media attention over the last few months.
The computing infrastructure that underlies bitcoin transactions is heavily undermined by the speculative price spike. The enermous amounts of money spent on developing and manufacturing hashing ASICs, and installing vast datacenters for mining are a school example of mal-investments in the Hayekian sense. Bitcoin has already sown the seeds of its future destruction, or at least decimation.
