That is a tad dramatic. That exchange handled 7% of Bitcoins, I believe.
The US dollar has not been backed by gold since 1934.
"The Congress has specified that Federal Reserve Banks must hold collateral equal in value to the Federal Reserve notes that the Federal Reserve Bank puts in to circulation. This collateral is chiefly held in the form of U.S. Treasury, federal agency, and government-sponsored enterprise securities."
Basically, the dollar is backed by the ability of the federal government to sell debt, that is then covered by the printing of money. At the end of the day? It is backed by a promise of "We are good for it". Pretty much the same as Bitcoins.
The only thing that can proof the US dollar from collapse is the US economy, i.e. the world's belief in the United States' ability to continue to be viable economically, which in turn is a reflection of the input of the millions of citizens behind it, in one way or another.
That is the basic premise and I agree with it. Interesting, is that in excess of one half of all US currency is held outside of the US. It is used as the currency du jour in a lot of countries where it is not "backed" by anything. The American government knows that they are only on the hook for less than half of their money.
@mr.elmwood wrote:Interesting, is that in excess of one half of all US currency is held outside of the US. It is used as the currency du jour in a lot of countries where it is not "backed" by anything. The American government knows that they are only on the hook for less than half of their money.
Actually, all that ex-pat currency is indeed backed by the reputation and power of America, which is all that's required to keep the value of the greenback almost universal. Having it in a lot of individuals' hands outside the US is a good thing for US trust and reflects well on what the world thinks of the US economy. It's the reason that in many countries ordinary street merchants will take US dollars - they know it will hold its value for the foreseeable future, whereas the currency of a politically and economically shaky nation may not be worth the paper it's printed on tomorrow.
It boils down to either lack of confidence or solid confidence in a country's future. If you're living in a struggling economy or unstable dictatorship, which currency would you hang onto? A universally trusted and universally exchangeable currency like the US dollar, or your own nation's currency? If you're living in, let's say, Syria, and needed to get out, your cache of US dollars from 50 years ago would be just as good today as it was then. It's the same reason Roman currency was used all over the empire and is still dug up in places like Britain or Turkey, etc.
We in Canada are pretty high on the "confidence" scale too, as are (usually) Australia, New Zealand, the Scandinavian countries, Japan, France, Germany, and to a lesser extent perhaps Great Britain. What do they all have in common? Stability and a reliably good future, both economically and politically.
The currency floating around outside the US can really only potentially cause a serious problem for the US economy if it were to be sold off en masse by a large holder or group of holders, which might create a sudden worldwide glut and attendant deflation of the US dollar everywhere.
Worse than that though might be the impression such a sudden sell-off would create that there is a reliability problem with US currency or by extension the US economy itself. This is probably the United States' big worry about China at the moment, and no doubt the reason the US is keeping its criticism and complaints about such things as human rights and Chinese commercial subsidies at a low decibel level.
At any rate, all of this is just to say that Bitcoin stands for nothing, represents nothing of value, and has such volatility that it will never be a stable and trustworthy replacement for legitimate currency. Criminals are simply using it because it's very convenient for their purposes. For ordinary people, well, you might as well invest your hard-earned, trusted, Canadian dollars in Syrian currency (or maybe Venezuelan?). 
