No need to post the whole thing, I think we are aware of what is going on, here is just the meat.
The problem with Bitcoins is the same thing that people love about Bitcoins: They leave no trace. It takes an incredible amount of computing power to create new Bitcoins with a PC (you can also, of course, just buy them on an exchange, which is what most people using them do). And a complicated algorithm keeps the total supply steady. Once these digital coins are created, they're still just a handful of bits and bytes, a little piece of encrypted code. There is no fundamental value.
But Bitcoins are nothing. You can't live in them and you can't wear them. You can't turn them into real estate or jewelry. Right now, you can use Bitcoins to buy books and computers and other goods and services, including, most famously, illegal drugs. But when -- if -- the exchange rate crashes, you can bet that those merchants will stop accepting Bitcoins, that the Tor-accessed websites will shut down. "[T]here's no significant community of people who conduct commerce exclusively (or even primarily) in Bitcoins," Lee pointed out. "And this means there's no logical stopping point to Bitcoin's price decline. So far Bitcoin enthusiasts have been buying Bitcoins as the price falls, convinced that the price will go back up eventually. But as the hoped-for rally has failed to materialize, more have gotten discouraged or bored and cash out, pushing the price down further."
Full thing is at
http://www.theatlantic.com/technology/archive/2011/08/the-bitcoin-economy-is-collapsing-with-no-sign-of-recovery/243253/
