Originally Posted by Nathan

The problem Bitcoin has is that there is no USE for normal people associated! With a normal currency, you can buy anything. With Bitcoins you can buy almost nothing.

So, the only reason why it was trading was, because it was trading... That will never work for a currency! The value of it can not be what trading makes it, it must be the demand that actually USING the currency generates, not the demand generated by SELLING it.

Regarding the question above by adult-help: What you see in terms of "value" is what the currency is being SOLD and BOUGHT at on mtgox.com. Meaning, mtgox.com provides a PLATFORM ONLY where you can deposit ACTUAL NORMAL MONEY and use that money to BUY bitcoins from OTHER people. So, mtgox does not generate BTC or convert it, but they provide a platform that lets me sell you 10 BTC for a certain amount of USD. You have USD on your account, I have 10 BTC, you pay me 720 USD (right now) and get the 10 BTC from me, mtgox takes a small commission from _ME_ (since I got the USD, the true money) and that's it. Now you have 10 BTC, I have more USD. I can cash out and walk away.

That is what has caused the BTC price spike, more and more people went to mtgox and wanted to buy some BTC from people that had them already. The people they bought it from walked away with USD.

This is it, end of the story. Nothing really special. (700 USD now btw, in the last 2 minutes it dropped further).. So right now more people are trying to get rid of the BTC for USD, instead of trying to find BTC to buy. That is why the price is dropping.