I agree that Quiggin gets it wrong. He doesn't take a serious look at its utility. Just the fact that I can send cash between countries via BTC and avoid currency controls is a value. Silk Road is evidence of a real value. So far every argument that I have seen as to why bitcoin is destined to fail has a number of obvious oversights. I'm not sure bitcoin will succeed, but I haven't yet encountered an argument that has convinced me that it can't.
The utility of bitcoin is like facebook: it Only depend of its userbase. No users = no utility. If I create a currency on the same model..ie: The CoinCoin. And somehow manage to get some big retailer to accept it (amazon, ebay, etc) all the value Bitcoin ever had will swap to CoinCoin in a matter of days.
The usability of bitcoin is pretty lame. And worst, the currency has proven its instability loosing any value as an exchange mean it could have had.