Isn't that the problem, though? Bitcoin was supposed to be a medium of exchange. Cash for the internet, in other words. Investing means that people really aren't going to be doing that, and it's just going to sit on a dusty flash drive on the shelf.

Not in the least. Bitcoin has many uses, and is a fundamentally new technology. Naturally it's going thru the technology adoption life cycle and every few months/years it catches up to the wider levels of adoption and more mature use cases.

It will become a currency when most of it has been mined and it's in widespread use and there aren't billions of people who have never heard of it... the price will stabilize then.

It's an error to think that the only use of bitcoin is as a currency. (in the traditional sense)

> Bitcoin has many uses, and is a fundamentally new technology. Naturally it's going thru the technology adoption life cycle and every few months/years it catches up to the wider levels of adoption and more mature use cases.

I have literally only seen one use case where it makes more sense to use bitcoin than to use traditional currency exchanges and that is illegal markets.

The downsides (hard to use, one way transactions, high transfer costs due to low block size, super easy to get hacked and lose all your money...) all massively decrease it's value over traditional currencies. Illegal markets only put up with all of those downsides because companies/governments have specifically made it harder for illegal transactions to take place over traditional currencies.

If you are buying something online internationally and there is an exchange rate tax, use Bitcoin. It's rare, but it happens. And it probably will more and more. Look at BitPay. It's pretty straight forward for a retailer if they want to be Kool.

> Bitcoin was supposed to be a medium of exchange.

Who decides what it is supposed to be? If serves as a place to store value, then it can do that regardless of what people think it is supposed to be.

Maybe bitcoin will never be used for smaller, more common transactions, and it will remain solely a store of value. But I think it is simply a matter of time before a solution is found to the technical problem of creating a cryptocurrency (or maybe cryptocurrencies) that can serve the purpose of handling many smaller transactions.

At this point there's no way to prevent Bitcoin speculation so people might as well give up on using it as a medium of exchange.

Those aren't in any way mutually exclusive. There's always enough of a bitcoin supply (and it's divisible enough) to have sufficient liquidity for use as a medium of exchange. With the in-progress work on bidirectional micropayment channels, it's only going to become an even more useful medium of exchange.