this volatile price rise will Doom the Bitcoin economy. all the merchants will be forced to go away.
Bitcoin is neither fish nor fowl, desert topping or floor wax.
On the one hand it trades like the cheesiest sub-penny stock ever, offering a combination of tiny total market capitalization, lack of transparency, and very few interested participants of size that takes me back to when the "pink sheets" were really listed on pink pieces of paper that got physically passed around. In this regard it's a toy for all practical purposes, an amusing diversion.
As a medium of exchange it offers a requirement of unusual determination to actually use it for its own sake, the wide acceptance and universal recognition associated with cowrie shells, and an ability to store a relatively fixed value for hours at a time. Thank goodness for the drug trade which generates enough volume for the speculators to have something to play with, for otherwise the "bitcoin economy" would likely be much, much smaller.
However, let's not overlook it's utility for money laundering, transaction fees for placement of many small amounts filtering through a number of addresses are much better than old-fashioned vehicles like Cayman banks and single premium life insurance policies. Too bad it's not big enough to absorb the demand and still keep laundering somewhat hidden.
So, all in all, bitcoin is a pretty interesting online game/simulation. Isn't that good enough?