There are all kinds of reasons to think that Bitcoin is a joke, and that the value of the bitcoins themselves will ultimately go to zero. It's inherently unstable as a currency, prone to hyperdeflation, has an artificial scarcity, and is subject to hoarding.

But there is one important thing about Bitcoin that its advocates correctly identify. As a payment-processing platform, it's very intriguing.

From Jeff Sommer at NYT:

Bitcoin gives file-sharing a brilliant twist. In essence, it has created “a decentralized virtual currency that uses a peer-to-peer consensus system to confirm and verify transactions,” two researchers at the Federal Reserve Bank of St. Louis concluded in a recent study. And François R. Velde, a senior economist at the Federal Reserve Bank of Chicago, made this assessment in a new report on bitcoin: “It represents a remarkable conceptual and technical achievement, which may well be used by existing financial institutions (which could issue their own bitcoins) or even by governments themselves.”

Bitcoin’s advantages as a low-cost means of transferring money have intrigued a number of corporate clients of the law firm Proskauer, though none of them are using it, said Jeffrey D. Neuberger, co-chairman of the firm’s technology, media and communications group. “It’s an early-stage technology,” he said. “But it could be revolutionary.” In short, in a world that some people consider almost as important as music — the precincts of money and finance — bitcoin, or a successor technology that shares its DNA, is given a good chance of influencing the future.

The existing payment system in developed countries remains archaic. It's not easy to zip money to someone, and fees remain high and frustrating. Using cryptography and peer-to-peer technology to instantly move money from one person to another without fees or time lag is a genuinely exciting and disruptive notion. Why people need to speculate on the "coins" is a head-scratcher. But the interest in how the technology could be applied is not.