Here's my response:
Bitcoin is the same kind of "bubble" as gold. A comparison between the two:
- Gold has ornamental use, and niche technology uses, neither of which contribute much to its perceived value. Gold is valuable because everyone thinks it is - because other people use it as a store of value.
- Despite its relative lack of inherent value, gold served as an economically stable medium of exchange for thousands of years.
- Gold is inappropriate as a medium of exchange in an online economy. It's impractical to trade at a distance without relying on third parties.
- Bitcoin lacks ornamental value and niche industry use, but is even better suited as a store of value.
- Bitcoin is extremely easy to send to anyone, at any distance, anywhere.
- The value of Bitcoin will stabilize once it approaches wide acceptance.
- Bitcoin may overshoot its ultimate value at some point, but right now it is far from the value it will need to have, if a significant fraction of people are ever going to use it.
- The main obstacle for Bitcoin is the inherent insecurity of most today's computer systems. It's currently hard even for an expert to hold Bitcoin securely.
- Once secure hardware wallets are available, and assuming governments don't band together to intervene, there's no reason for Bitcoin not to supersede gold as a preferred store of value.
- The current value of all gold in the world is about $6.4 trillion.
- The current value of all Bitcoin is approaching $12 billion. It can easily grow by another factor of 100 before it begins to compete with gold in market cap.
It would take a very significant concerted effort, a sabotage, or a discovery of some completely unexpected technological flaw, to sweep the floor from under Bitcoin, at this point.
Disclosure: I did purchase some Bitcoin. Stupid me didn't bother to buy in 2011, when I first heard of it; nor in 2012, when it was still at $5, even as I was seriously looking into it. But I finally got some this year. I'm planning to hold onto it indefinitely; there's just never any reason to dump it. Even when it reaches $100k, it's likely still going to grow. Besides, what would you exchange it for? USD? Is that going to grow?