Well that's the million dollar question. This is my view on things:
It's going to take off. Not as a currency, but as a payment system. Instead of linking bank accounts and paying for stuff with credit or debit cards online, you will be able to buy Bitcoins and use that, a bit like vouchers. The value of the Bitcoin is determined by demand. I see the Bitcoin as the gold or silver. It's not a substitute for something of value, it is the something of value.
It's getting accepted more and more and will continue to do so. So far the largest retailer to accept Bitcoins is Overstock.com. Their sales skyrocketed in the first 24 hours, taking $130k in Bitcoin sales alone. There are loads of smaller or even much more extravagant things you can buy with Bitcoin. You can book a space flight with Virgin and pay for it with Bitcoin. Zynga, the company behind big hitting casual games like Farmville and half the stuff on the Apple store, has started testing accepting Bitcoins. You can pay for college with Bitcoin. You can go to an ATM and withdraw Bitcoin, go to a pub and buy a beer, and have a meal on the way home, all paid for by Bitcoin. You can even buy a house with Bitcoin.
Obviously I'm making it sound like you can pay with it everywhere, when the fact is that you can't, simple as that. In order to carry out the scenario mentioned above, your choices of where to go, what to eat and drink and what town it'd be in are extremely limited, but it's happening. Every day more and more small establishments are accepting Bitcoin. It's happening, right now. Hell, two days ago a company announced that you can pay your taxes with Bitcoin.
There are ATMs available, and some have been installed are are functional already. Canada has one. New York is getting one. Hong Kong and Taiwan are following suit. Australia. Israel. Loads more.
China put a stop to as much as they can for good reason - the Chinese government only allows you to take x amount of their currency out of the country, and people were circumventing this by buying Bitcoins, sending them abroad and then selling them again. It is an unregulated and incredibly difficult to trace manner of transferring funds across borders without any tax or revenue implications. It has a huge underground following for this reason, and Bitcoins in China have hit $1k again despite the government's efforts.
Similar thing with India. The locals have lost faith in their own rupees so they are using Bitcoin to pay for things. Zimbabwe... well, that speaks for itself. It's not just an alternative, in many places it's a solution. It's not going to die. It can't. There are people depending on it now and the governments know this. They also know that Bitcoin is a contributor towards their GDP. Not much, but if they outlawed the whole system the effects would be noticeable.
This is an interesting read: What is a Bitcoin really worth in China and India?
We're past the point of no return. This is the next thing and I get called all sorts of things for believing it it, but I just remind myself of the reactions I used to get when I told people that you could send a letter electronically from one computer to another - and look at email today.
One thing I'm still struggling to get my head around is the whole Litecoin thing. It's basically accepted amongst the community that Litecoin is the Silver to Bitcoin's Gold. That would make sense, if it wasn't for the fact that Bitcoins can be split up into "satoshis", which are 0.00000001 BTC.
The number of coins is finite, and that's where Litecoin might come in. Once Bitcoins are more widely accepted there value will shoot through the roof as there simply won't be enough to go around. Some people believe that one Bitcoin is going to hit $100k. I think they're being optimistic but sooner or later the US government is going to release a statement that they've discussed how to regulate and tax bitcoins, people will start having more faith in them, companies will start accepting them and the value will jump. I'm not talking about a few dollars per coin, I can see them hitting $10k easily.
The UK's IRS, called HMRC over here, has already decided that Bitcoin is a private currency and will have laws applied to it.
People are really starting to sit up and take this seriously. Some are optimistic, some are pessimistic, and some feel threatened. JPMorgan even applied for a patent for exactly what a Bitcoin is. This is the only article I can find on it, since JPM said that they were in no way inspired by Bitcoin, all the articles seem to have disappeared, but this was a news report on some very reputable pages, including the New York Times if I remember correctly.
I'll leave it at that for now, but f you have any questions, fire away!