Read the article again. It assumes everyone will hoard because they think there's a chance bitcoin might become successful (and in the meantime there's not a lot to spend bitcoins on anyhow).

But this hoarding is exactly what creates a bubble, and the lack of anyone spending means that there will never be mainstream shops using it, so it will never have worth.

so..when hoarders realize by not allowing bitcoins to circulate, they will have no worth, some will start to sell their holdings since it becomes obvious they are not going to continue appreciating. This causes circulation to increase again, which will make the currency more valuable again. The point is, people are just assuming that both extremes happen--hoarders hoard forever, despite the currency going to zero. In reality, there is a feedback loop and an equilibrium will be reached.

Prisoners Dilemma. BitCoin as a whole would get more popular if people spent it. However if lots of people spend/use it (and the price goes up), then it's better for you to hoard it. However everyone/lots of people will think this way and hoard it. This means it can't take off and get popular.

But as the amount of people hoarding it goes up, the value of bitcoin will eventually drop. You can't have a market that climbs indefinitely on the basis of speculation alone.