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This was discussed at length in the "Bitcoin is Evil" thread yesterday, but the general idea is that Bitcoin can still be used to make "pretty things" even if you aren't using it as a medium of exchange. Namecoin is one particularly interesting example - fully decentralized DNS. The ability to conduct authenticated P2P transactions of any nature, not just financial, is what makes Bitcoin and its ilk interesting, IMO.

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nonono. namecoin is not bitcoin. you are explaining why proof-of-work-schemes are useful. that is not the question.

the article (quoting Krugman) says that there are good reasons why bitcoin might be a wonderful medium of exchange, but there is no good reason why it is a good store of value.

That specific premise is false. An alternate use case does not provide a -meaningful- floor for any store of value. Tulips still have an alternate use case.

I'd claim Krugman is arguing against cryptocurrency in general rather than Bitcoin specifically.

The affordances provided cryptocurrency are new. It's a fair bet that will provide value.

How many factors currently contributing to the value of the US dollar were in place within the first decade of its existence?

I'd also claim the libertarian hopes for cryptocurrency are overblown, though they are definitely contributing to its current level interest.

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