In 2006 I read a paper about a cryptosystem for e-cash and it was way worse than BitCoin. When I read about BitCoin, I couldn't believe how perfect the scheme was. It turns out there's no "Arrow's theorem" for e-coins -- every desirable criterion can be satisfied at once.
The biggest doubt I had about BitCoin was that it would never gain social traction. But watching the USD/BitCoin exchange rate increase 10x in 5 months has made that doubt smaller in my mind.
And so I offer LW readers this applied-rationality suggestion: If you're looking to make a high-risk investment, BitCoin seems like an overdetermined choice. I judge it to have a very high expected return - something like 2x in 1 year - and I'm investing today.
The big problem I see with BitCoin is that everyone's entire transaction history is public. So if you ever use BitCoins to buy something that needs to be mailed to you, or trade them for money sent to your bank, your anonymity is basically gone—anyone who can coerce/subpoena/spy on the "real life" side of a single transaction can link your real identity to any transaction you've ever made or will make.
Tangential, but a subject of some local interest:
Why Bitcoin will fail by Avery Pennarun. "The sky isn't red." Thesis:
I'm not sure I buy these and am not competent to evaluate his claims on 3., but would like others' critique.
L019: Bitcoin P2P Currency: The Most Dangerous Project We've Ever Seen by Jason Calacanis. A rather more enthusiastic viewpoint of the project:
The actual text contains many more caveats than the eye-catching selection of points above.