I live in an average European country. Anything except legal tender is illegal here for sellers to accept as a form of payment. There have been several attempts to create e-currencies, but all of them have been shut down by the authorities. Shops won't accept anything but legal tender because the laws forbid it. I don't know laws of other European countries, but I have never heard of a single European e-currency, so my guess is that the laws are the same in most, if not all of them.
In US, every attempt to create e-currency in the open ended by accusation of money laundering or something else, and the currency has been shut down, like e-gold. Even those who accept the alternatives to dollar risk made up criminal charges. And in US it's not even illegal to create alternative currencies (I believe). But the state won't accept the alternative, because it's a threat to its very existence. If shops start excepting Bitcoins, The Man will simply ban it and will be done with it. They can't stop Bitcoin technically, but they can do it legally, and they will if necessary.
Face it, Bitcoin has almost zero chance to become part of "white economy". Black market is its only chance. For Bitcoin to succeed, it has to be backed by a real economy, because right now it's mostly a speculative game, and once we run out of new buyers and Bitcoin flatlines, everybody will start cashing out the profits and Bitcoin will fall like a penny stock. As they say, what goes up by an escalator will come down by an elevator.
In developed countries black economy is about 20% of the whole market. It's much bigger in developing countries. World economy is about 60 trillion dollars (not counting the financial derivatives, which are much bigger), which makes black market at least 12 trillion. Now, mind you, most of it is not dealing with illegal stuff like drugs and guns and so on. It's merely tax evasion, e.g. selling things without accounting. I have been part of it since 2005, when I decided to stop paying unreasonable about 70% taxes, state spying on me, restricting my freedoms, increasing budget deficits and building socialism. I still pay 20% VAT (I spend most of the money I make) and health insurance, which I do consider to be a fair tax for what I get, but that's all. My only protection are still reasonable bank privacy laws, which prevent the tax man from mining banking data for people with income but no tax payments. Lots of people do that, under their real names, issuing fake or no invoices, and getting paid to their bank accounts.
As the states are tightening their surveillance and taxing the hell out of us, Bitcoin will become more attractive to people like me. If only 10% of black market moves to Bitcoin, we can have 1 trillion dollar economy, enough to make Bitcoin stable currency and a good store of value, too.
Now, the Silk Road.
Drug dealing can be very dirty business, witness the mexican drug cartel. Silk Road is different, many small individual sellers catering directly to their clients. It makes drug dealing into what it should be, a victimless consensual "crime". I have absolutely no problem with that, given, as I said, that Bitcoin's chances on official market are almost nil. I have even put on offer my small stash of psychedelic mushrooms and made two sales. If I manage to sell them all, I will turn that into regular business and start growing some pot, too.
What you are missing is that Bitcoin won't be attacked because of Silk Road. It will be attacked because of being viable and better alternative to fiat legal tender. Silk Road will serve only as an excuse for attacking Bitcoin. Shut down the Silk Road, and they will come with another excuse, like money laundering (which Bitcoin can do very well and easily).
Silk Road is currently probably the single largest Bitcoin market. It's little more black then the rest of Bitcoin's black market, but the difference is not really qualitative.
So, stop fighting it and embrace it instead. Besides, with unregulated currency, there's really nothing you can do about Silk Road except endlessly complain about it on the forum. It may make you feel better about yourself, but maybe there are bigger causes than that
