That's a fallacious argument. The reason it's mainly used by criminals and speculators is because it's brand new, as far as currencies go. If Bitcoin had been used by lots of people already who then abandoned it, you might be able to make the argument you're trying to make.
And one thing I've noticed it increasingly being used for is basic (small-scale) financial services - for example, loans.
I doubt people are stupid enough to conflate Bitcoin with 3rd party websites that use bitcoins. Maybe a few will, but the success or failure of Bitcoin does not ride on a what a few dumb people do.
And Bitcoin does not have a "brand." You could say, and probably meant, "reputation."
> I doubt people are stupid enough to conflate Bitcoin with 3rd party websites that use bitcoins.
Well, some of the most touted features of Bitcoin are that it's anonymous, untracable, and unfettered burdensome mandates like FDIC insurance and PCI-DSS compliance.
In this case, those features mean in all likelihood the thieves won't be traced or punished, the depositors' money won't be returned, and there was no independent auditing to catch crap security practices.
High profile thefts might make people think they don't need the features that Bitcoin is offering.
