The problem with negative articles like these is that they are missing the whole point of Bitcoin. Sure, an individual Bitcoin is just worthless bits of data, literally nothing but a digital fabrication. However, the real value of Bitcoin isn't the "coins" themselves - it is the transparent, distributed, anonymous payment network that makes up the entire Bitcoin economy. This economy is steadily growing, day by day, and if you look at the core structure of the system and really consider the eventual worldwide ramifications, it is simply amazing. It is popular in Argentina right now. I imagine people in countries such as Zimbabwe would see the usefulness in it as well - you can't spend gold bars from your smartphone. There are a lot of speculators in the market right now trying to make a quick buck. The exchanges are small, unreliable, and points of failure in an otherwise distributed network. The recent crash may have never happened had MtGox, the largest Bitcoin exchange with over 80% of the market, not fumbled the ball at the crucial moment and caused a panic. Every day there are more and more businesses accepting Bitcoin, more media coverage (it was mentioned on The Colbert Report tonight), more people finding out about it and researching it for themselves. This is a revolutionary new technology, and I am very excited about it. I only wish I had paid more attention to it two years ago when I first heard about it.
I won't be using bitcoin until I can walk down the street and use it to pay for a cup of coffee. Electronic goods and programs are luxuries. Food it not. I can't eat a bitcoin, and I can't trust it to be accepted by grocery stores. I can trust a dollar to be accepted by a store, and worst case scenario, I can use the dollar as a mildly expensive wallpaper.
I agree that Quiggin gets it wrong. He doesn't take a serious look at its utility. Just the fact that I can send cash between countries via BTC and avoid currency controls is a value. Silk Road is evidence of a real value. So far every argument that I have seen as to why bitcoin is destined to fail has a number of obvious oversights. I'm not sure bitcoin will succeed, but I haven't yet encountered an argument that has convinced me that it can't.
The utility of bitcoin is like facebook: it Only depend of its userbase. No users = no utility. If I create a currency on the same model..ie: The CoinCoin. And somehow manage to get some big retailer to accept it (amazon, ebay, etc) all the value Bitcoin ever had will swap to CoinCoin in a matter of days.
The usability of bitcoin is pretty lame. And worst, the currency has proven its instability loosing any value as an exchange mean it could have had.