> It's a bad idea simply because it is utterly dependent on networked computers run by individuals remaining secure: an attacker can trivially steal your keys, and all Bitcoins controlled by them, and as so often with computer security, they only have to be lucky once. Worse yet, unlike with many other consequences of successful system compromises, restoring from backup and fixing the holes won't help you: the money is gone into your attacker's pockets. That this has happened repeatedly, even to major Bitcoin exchanges, suggests that the scheme is unusable by anyone who cares about the security of their money until such time as computer security improves radically.
The major exchanges that this happened to, have indeed tightened up their security, and there hasn't been a major exchange theft in quite a while. There have been several fly-by-nights, but these have been the same sort of scams that have always existed. The security problem is here because people haven't figured out that they can treat bitcoin as a toy, or as a store of significant value, but -not- -both-, or they'll have a bad time.
The problems you list are still problems for real banks, who deal primarily in database currency. In fact, they have much, much more complexity to deal with because the problems that bitcoin solves cryptographically (transaction verification, double-spending) need to be solved by manual tracking and extensive audit trails. The difference is that the people responsible for bank security (at least in the backend) know what they're doing, while bitcoin security is implemented by hackers with too much free time, many of whom have no knowledge or interest in financial security.
(Eventually, I expect everyone will offload their security to some bank, and just walk around with a bitcoin debit card. So the world would look the same, just with a more efficient backing store.)
> I am rather surprised that, post-2008, anyone would consider a non-governmental monetary system worth the risk.
Interestingly, for many people, the 2008 crash is exactly why they would seek out a system in which the central bank's power is severely limited.
It's interesting that Bitcoin showed up in a thread about software patents, because regardless of your feelings on its politics or economics, it is a -highly- nonobvious and innovative system. But it is unemcumbered by patents, its inventor is unknown except to (maybe) one or two people, and yet it keeps trucking along happily. In fact, Bitcoin is routinely copied and modified in trivial ways, and the resulting systems collapse under their own weight because they do not have the developer power or first-mover advantage that Bitcoin does.