I've kind of stayed out of this discussion because I think one's interpretation of the product depends on more on your views about economics and politics than any disagreement about bitcoin's properties. And Tyler Cowen's skepticism makes me think that bitcoin proponents are deep enough into Rothbardville that our lines of engagement would get fruitlessly broad.
But I'm curious on one point - why do some people have this dramatic 'coins'll be worth thousands or nothing" attitude. I can see the zero, and I can get my head round the viewpoint where it's plausible that a large chunk of the economy gets covered by bitcoins and they're worth thousands. But what about it staying where it is now, as a complementary used for drug deals, money laundering and Konkin t-shirts? Is there some reason that wouldn't be stable?
Bitcoin has a number of practical advantages for ordinary e-commerce, such as no chargebacks and low transaction fees. I think that if (say) Bitcoin and Paypal were equally normal-seeming in the public consciousness, then most online vendors would prefer for their customers to pay with bitcoins. This suggests that one of the most important limiting factors for adoption is visibility, which is to say, adoption. The spread of Bitcoin is self-reinforcing.
We've started a habit of creating periodic Bitcoin threads to confine discussion thereof to those threads and prevent excessive proliferation of Bitcoin topics in the discussion section. Here is a link to the last one, which links the other discussions. Lot's to talk about, and another bounce in Bitcoin's value (up to 33 then down to 24), so share your links and thoughts!