Economist/founder here. And somebody who has not yet commented on bitcoins. Watching otherwise intelligent people adopt these is hilarious. I won't speak to the tech side (I'm sure its strong). Bitcoins are, in fact, an outright disaster/scam.
1 - as highlighted by the author: bitcoins are equity positive in their creation. we can trade with seashells as the medium (painted red so distinguish them as special currency, of course), but every time somebody goes to the beach with a bucket of paint, they get rich. money creation in its traditional sense (generally, except countries with serious issues) does not create equity, it only increases liquidity. major difference. tomorrow we could all adopt a new currency, but we would generally have to back it with something else of value (sort of authors point #2, weakly explained). bitcoins are the creation of 'free money' out of thin air. we can assign it value (if we dupe others into taking it for goods/services), but its value-less
2 - the computing power devoted to this game is completely wasted. look at this from 30,000 feet -- all of these smart people with smart computers are crunching numbers on a frivolous exercise and not for something productive. total deadweight loss
bitcoins are the equivalent of beanie babies. you could buy a car with those, and they became currency, albeit very briefly. but the inherent value is that of a stuffed doll. bitcoins have a negative inherent value