Maybe this is a misinformed question, but isn't the reason anyone is adopting it at all due to the fact they can later convert it back into actual currency?
But if you are business who takes money over the internet and is sick of the banking BS and you notice that there are a lot of people out there holding these strange coins which seem to have a rising value..
It has a rising value because you can convert it back into dollars. It's also worth pointing out that same banking BS protects not only often protects their business but their customers as well... are there bitcoin "banking" services that provide that same level of service to businesses? With that in mind, are there any serious businesses that exclusively accept bitcoins?
If it has a rising value then it's in your interest to hold at least some of it unless you think it's about to crash.
If you are a merchant then the easiest way to start holding it is to start accepting payments with it, which is easy enough to do especially if there are enough people holding it already.
At that point it has value not just because you can convert it , but because you can buy stuff with it.
I believe the reasons are that it's A) decentralized B) portable C) easy for businesses to adopt
The liquidity part of it is a big factor, but we've had pretty good liquidity for a while if you're willing to do a bank wire or trade with someone in person.
Those features are all well and good, but the only reason a business would be interested in accepting them is because they can convert it back into <currency>. There aren't enough other businesses accepting bitcoins, especially ones providing complex/critical services, for them to simply accept bitcoins with the expectation of using the bitcoins themselves for further trade.
It depends, it's value is to some extent determined by an expectation of the amount of businesses that will begin to accept it for some things which is a factor again determined by it's expected value.
In other words it will hit an equilibrium value where the price modifiers in both directions balance each other, but nobody knows what that is.
Think it more like how the value of a futures contract might be determined.
But if you are business who takes money over the internet and is sick of the banking BS and you notice that there are a lot of people out there holding these strange coins which seem to have a rising value..