After reading all about bitcoins I love the idea to no end! The long term design is quite good, however the short term "get started" method was not thought out enough it seems.
The only way for bitcoin to become a real currency, rather than the stock-like gambling mechanism that it is, would be if you could only transfer into bitcoins one way. That is traditional currency to buy bitcoins, but not the other way around. You can not sell bitcoins for cash.
The way for that to work would have been that people who wanted into the economy would have had to pay a miner (none of this centralized exchange crap) and as soon as that miner completes a block chain, the 50BTC would go to someone who payed them. (There are tons of ways to turn this into a cooperative business such as the mining pools happening now)
But the simple fact that you have mechanisms to trade back and forth turns it into a gambling mechanism that will never get away from the currencies people are trading it in.
I am in a position right now where I am developing some hardware that could offer bitcoin support. But the only way to do it would be to dynamicly value bitcoins at their exchange rate. And to remove volatility risk, I would have to convert any bitcoins immediately into cash. This is the exact opposite of the whole point of bitcoins, they should be used as a different currency, not as an exchange mechanism.
Businesses can not operate on traditional money and bitcoin at the same time. The reason being that big staples of rent / utilities / wages will never switch over to an all bitcoin model. The only business that can and should accept bitcoin is one that can work only in bitcoins. So perhaps small homemade item trading. That is a huge limiting factor.
So final conclusion: Bitcoins is a great great idea, and a worthwhile experiment. But I dont think it will ever switch from a stock-like gambling mechanism to a currency ever.
