Whether or not Bitcoin succeeds long-term, it has opened up the discussion about transferring currency over the internet, and that is a huge step in itself. Right now transferring money online is very slow, often 2-5 days for ACH transactions. Additionally, it's expensive. Companies like PayPal and Visa have made huge profits by making the process easier, but it's really something we should be able to figure out and turn into an open-source protocol like all the other protocols the internet is built on. I think your complaint about it not being backed by a large nation is valid - it's very hard to tell how much of the Bitcoin value stems from the bubble and hype and how much is real. A backing nation and a bigger marketplace would really bring it down to Earth. I don't think there's a "random startup company" involved anywhere though. The Bitcoin protocol was released anonymously and is maintained by a community the same way most open-source technology is. There are a variety of small businesses and startups trying to stake their claim, but they're all providing auxiliary services and exchanges. Bitcoins themselves are based on cryptographic trust, not trust in one entity.
We're talking about an ATM spitting out chits in one coffee shop in Vancouver. I will give you that this is a step above getting paid in SecondLife Lindens that cannot be converted to cash. However it's not much of a step up because THIS ISN'T CASH. If the goal is to transfer currency online without the lag of EFT or ACH (which I understand well, as I handed funds transfer investigations at Bank of New York in the 1990s), that isn't clear from the hype of this ATM and the Silk Road bust. If we want to spend or get money online, then we should be able to use normal currency. Otherwise people are converting real money (USD, CAD, EUR, etc) to a highly volatile peg so they can swap the pegs. Meanwhile the pegs are not worth the same on egress as ingress. Right now they're going up way too fast, which suggests they'll crash just as quickly. I also understand not trusting PayPal. While I use it, I know that they aren't as tightly regulated as a real bank (and love playing both sides of that fence -- something I saw when they were my software customer). However I only use them to buy things -- I won't open a credit card with them. Combine these thoughts and I'm even more leery of Bitcoin. If it's just a protocol, there isn't even anyone to sue. There is no accountability. You put in usd5 and get... nothing? Does this protocol even track its value compared to conducted currencies? If not, then this is a rather expensive "dialogue".
I think you're conflating two very independent aspects of the Bitcoin story - the protocol and the exchanges. The protocol itself is responsible for transferring bitcoins from one owner to another. It doesn't need external accountability because it's defined mathematically. It's either secure, or it's not - that can be proven through analysis of the protocol, independent of any government agency. That, in itself, is really uninteresting to the public at large. The real question is how the coins should be valued. That is dependent on a ton of other factors, most notably how bitcoins are used and how they're exchanged for fiat currency. You're pointing out two major issues - the lack of products and services that can be bought with bitcoins (which causes the value to be highly volatile and dominated by speculation) and a lack of trusted exchange agencies (like banks) to provide accountability. If you put in usd5 and get nothing, you absolutely have someone to sue - the company you used during the exchange (for example, the owner of this ATM, or sites like mtgox.com or btcchina.com). But that has nothing to do with the protocol described earlier. For the same reason, the protocol does not track any value. It's responsible for securely transferring bitcoins, period. There are however many exchanges where bitcoin's value in different world currencies is tracked (good resource here: http://bitcoincharts.com/markets/)