Bitcoin is still a baby and is
already capable of saving people money and increasing the security of their transactions against fraud (contrasted to
190 billion annual credit card fraud)
If you're the victim of credit card fraud, you get a refund from the card company. If you're the victim of Bitcoin fraud, you get nothing. And the perpetrator walks away scot-free.
What about the merchant? The merchant receives a chargeback and eats the cost, which means cost indirectly
does get passed back to consumers. Also victims of credit card and identity fraud can suffer damage to credit history which is tedious and sometimes impossible to recover from.
To this you'll reply: "Only stupid people keep their BTC on exchanges or other BTC service providers in the first place! Smart people keep all of their BTC in super-cold storage!"
True. Cold storage is a good solution for the nerds, the geeks and the BTC cultists.
But the Average Joe is stupid. Cold storage isn't user-friendly enough for the Average Joe. That's why BTC never can go mainstream -- unless reliable (and regulated) third parties emerge. And such third parties can only operate at a cost, i.e. basically the same way the banks and credit card companies operate.
If you read my earlier post you'll see my emphasis is on technology evolving. The way Bitcoin was experienced in the previous five years will not be how it's experienced in the next five. One thing I think we'll see is hybrid solutions like
BitGo where the user essentially partners with an online service to manage their coin security. Such companies, being based completely on technology, don't need much to operate; even less than Amazon.com, for example, which while building physical warehouses absolutely destroyed traditional brick-and-mortar retailers.
As for regulation/compliance that is still shaking out, but things are not as arduous as you make out. For the U.S. at the federal level, a business only needs to register with FinCEN which is simple. Individual states are slowly making their positions known, but Texas for example says no additional regulatory burden applies, so long as no fiat is involved. Previously two other states (I forget which, something like WY and MT I think) had no MSB licensing which remains the same for Bitcoin. California recently adopted Bitcoin favorable legislation and NY is working on a 'Bit license'. So we may find completely above board business compliance for Bitcoin is quite workable for enterprising entrepreneurs, especially funded ones, after all.