The first question is why do people still use cash, and more importantly who uses it and why? There are two very important surveys in the United States .
The first is that “some 29 percent of poll respondents reported that they do not have a credit card, according to the scientific poll, conducted Feb. 5-7, 2010, for CreditCards.com. That was a sharp increase -- more than 10 percentage points -- from the number of respondents who reported having no credit cards in June 2009 (19 percent)” This is from: http://www.creditcards.com/credit-card-news/poll-1-in-10-americans-gives-up-loses-credit-cards-1276.php
The second is The 2009 FDIC National Survey of Unbanked and Underbanked Households http://www.economicinclusion.gov/household_survey.html
The results are again telling “
“An estimated 7.7 percent of U.S. households, approximately 9 million, are unbanked. At least 17 million adults reside in these unbanked households. In addition, unbanked adults may also reside in other households”
“In addition to the unbanked households, an estimated 17.9 percent of U.S. households, roughly 21 million, are underbanked. The number of adults that reside in these underbanked households is about 43 million”
The simple reality is that close to 30% of adult US residents do not have a credit card and a sizable percentage of those do not even have a bank account!. These results are for the United States one of the wealthiest countries in the world. Just imagine for example what the results would be if similar surveys for example were conducted in parts of Africa. What do these people do? Simple they will use cash and will likely continue to use cash so until either the electronic payments industry figures out a way to issue merchant accounts to the poor, destitute, and homeless or poverty is completely eliminated worldwide.
So where is the real opportunity for Bitcoin? If one considers in person transactions it is a very tough sell. Bitcoin is competing with Cash, Credit Cards, Debit Cards, and in some cases Cheques, Traveller's Cheques etc. The reality is that a briks and mortar merchant is not going to attract that many new customers by accepting Bitcoin. The really huge opportunity for Bitcoin here is in eCommerce where the only practical competition is Credit Cards. Try buying products or service on-line without a Credit Card. In the United States alone that means close to 30%of the adult population cannot in most cases purchase on-line. For the on-line merchant accepting Bitcoin is a no brainier. Furthermore the customer without a Credit Card will figure out a way to get Bitcoin if that is their only option to purchase the product or service. There is also huge opportunity for some bricks and mortar business in selling Bitcoin for Cash as close to 30% of the population will want to obtain Bitcoin to purchase on-line.
The challenge for the Bitcoin community is to first go after the low hanging fruit left behind by the Banks and Credit Card Companies, that in the United States very likely has just lost lost a home to foreclosure and has a FICO score of 350.
You're forgetting debit cards. Sure, there's still the 7.7% without bank accounts, but the majority with accounts have these cards, and they work great for online purchases when you don't have a credit card.
