BitCoins are defective by design.
BitCoins are defective by design. Their backers confuse potential (dubious) value as an investment with usefulness as a currency; the two attributes are inversely proportional. It is NOT a sign of success when your currency, in relation to the Dollar, Euro, Pound, oz gold, whatever shoots up like a rocket.
You want investments to appreciate in value, or, at the least, remain stable. Currency, on the other hand, you want to remain relatively constant in value in relation to something you want to exchange for. (Unstable currency inhibits the credit market. Nobody in their right mind wants to take out a loan in a currency that is subject to annual deflation of several hundred percent... it'd make a loan shark look cheap.)
Keeping the value of currency stable is the primary reason virtually every modern economy uses fiat currency. (Some central banks are better at it than others admittedly.) Fiat currency allows the supply of money to increase (or decrease) with the size of an economy. BitCoins, due to the poorly chosen supply curve are extremely deflationary by design, putting the "currency" into a trap where it MUST massively deflate to be anything more than a niche toy, but that very same predictable attribute prevents their wide adoption.
It's kind of funny... whenever you point out deflation to a BitCoin fan, they invariably point out that it can be subdivided into tiny units, and therefore deflation isn't a problem. As if illiquidity due to unit size is the only issue caused by deflation... (and, due to small trading volumes, the liquidity issue isn't really solved.)
If people want to trade BitCoins as a hobby, more power to them... they just need to realize that when the fad wears off, somebody going to end up holding the bag, and that's likely to happen sooner rather than later. At least Beanie Babies were cute...
(On technical grounds, I also have doubts about the scalability of the system once the BitCoins are subdivided.)