The reason that people use fiat currencies is because they can trust the institution/government backing them. They can trust that if they are handed a dollar by a business, it's a dollar, no questions asked.
If folks have to worry about whether or not the person they're exchanging with is being legit, and whether or not the institution handling the transaction will be as well, they're going to be turned off.
Like it or not, most people are lazy; adding one more layer of headache to financial transactions will be a MAJOR turn-off for a vast majority of people.
Bitcoin is a fiat currency and I trust the Bitcoin specification a lot more than I'll trust any central bank. They're notorious for usury, secret bailouts, and inflation.
>They can trust that if they are handed a dollar by a business, it's a dollar, no questions asked.
Well you can trust that if you're sent a Bitcoin then it will end up in your wallet.
>the person they're exchanging with is being legit
This is the same thing that happened with online shopping at the end of the '90 and early '00s. Consumers got used to using their credit cards online and they will get used to the notion of owning, transferring, and protecting digital property.
>adding one more layer of headache to financial transactions
There is no such headache. The software will improve and the banking infrastructure will grow. I expect to see banks that hold their reserves in Bitcoin and give out lines of credit denominated in Bitcoin. Infrastructure will solve this problem, but first capital is needed to meet current regulatory compliance with the archaic legacy system that is currently in place.
Somewhat unrelated: the Winkelvoss Twins are making an ETF for Bitcoins, and its going through the SEC right now. http://blogs.wsj.com/moneybeat/2014/01/17/lawyer-for-winkelv...
So at very least, SEC approved BTC funds are beginning to be set up. Its only a matter of time before a startup goes for full SEC approval in the BTC Exchange world.
Integration into US Society and Regulations is a good thing, and will give much confidence to the rather scary world that BTC currently is.
