Bitcoin is a ponzi scheme. That people think they have any value shows they have a fundamental misunderstanding of value. This group might include a lot of people, but the number of people who owned over-priced houses in 2008, or dot-com stock in 2000 was large as well.
HN'ers talk about how they are sober, logical, rational people who can see business (and engineering) opportunities that "traditional" business and finance can not. So Bitcoin is a good lesson in this regard, since the snake oil seems to have infected Silicon Valley like some west coast est cult, with lots of major VC's singing the praises of this scam they are running. Even people not interested in Bitcoins should pay attention to this aspect of Bitcoins, as familiarity with these scams is useful. You can see major VC's lying about the future of Bitcoin, the cluelessness of so many people here and so forth. Aside from understanding scams, you'll understand that there are some people, such as myself and others talking about tulips and ponzi etc., who understand the concept of value. The people hyping the Bitcoins, which will inevitably go to $0, do not understand value, but despite this, nothing will really change. The majority will still listen to the big VC and angel con artists peddling this type of scam, those of us who were prescient about it will be ignored - though inevitably proved wrong on Bitcoin, the VC scammers will still be considered "right". This will be one of the more instructive lessons, not that of Bitcoin. One of these more instructive lessons is that the VCs are fundamentally wrong about why a currency or commodity has value. We understand value, they don't, but that knowledge only helps us avoid scams like Bitcoin for now. They hold the microphone and those of us who are right will be marginalized even when proved correct. It's kind of like how Richard Dawkins, who is correct about reality, logic, Christianity and so forth, is a marginalized figure, because preachers shaking down their congregations for tithes and money are who have the microphone and the power. But in this case we're not talking about delusions infecting uneducated, rural yokels, we're talking about delusions that infect the educated, well-to-do denizens of the Bay Area. Bitcoin is down 7% today, and way down from last November, when Bitcoin was trading at $1160, and no matter how much the bagholders on HN downvote my karma, nothing will stop Bitcoin's drop from that $1160 peak last November to today's $326, to it's inevitable proper price of $0.
I've talked about WHY Bitcoin is worthless in previous posts, but to reiterate - the question is WHY is Bitcoin valuable? Ask that simple question before buying a Bitcoin, or spending thousands to get an ASIC on backorder (the major Bitcoin ASIC sellers, Butterfly Labs, were raided by the feds recently due to fraud). There is no answer. "It's valuable because people are buying it right now" is not a real answer. You could say that about new Sacramento real estate developments in 2008, or Pets.com stock in 2000. It's a tautological argument - if people are buying it for $326, according to that theory, it's worth that because people will pay that, if it drops to $2, it's worth that because people will only pay that. It's a tautological argument.
Commodities have a real value. Real, long-term currencies are just commodities with traits that make them good currencies. The traits are things like durability, portability, uniformity and divisibility. People have been trading for thousands of years, so what has been a currency for thousands of years? Gold has been one of the most popular - not because it is different than other commodities, other than those mentioned traits which make it a good currency. All of the precious metals make decent currencies.
Half a century ago US currency was paper with no inherent value, but with the promise that one could trade it for gold that was held in Fort Knox and other places. So through all these thousands of years, currency was tied to a real commodity, a precious metal. Bitcoin does not have such a link.
Of course in 1971, Nixon broke the link between Federal Reserve notes and gold. Other major currencies followed suit. Some Bitcoin advocates point to that event and say Bitcoin can float on thin air as well. Why that is not so is too much to go into in an HN comment. Suffice it to say, the US government holds over 10,000 tons of gold in Fort Knox and other places. If US currency ever began to collapse, a simple announcement that dollars were convertible to that gold at a certain price would stabilize the currency. Why does the US government spend all that money to hold 10,000 tons of gold? It's understood that that gold still backs US currency, in a more abstract, unpromised way. There are no 10,000 tons of gold backing Bitcoin.