So then what's the point of the regular guy merchant being a client of bitpay, etc.  if the payment processor just transfers the volatility risk back on to them?   In my non-bitcoin life I deal with retail merchants every day, and in trying to sell them on the Bitcoin concept, these are genuine concerns that come up in discussion.

This does nothing to stabilize prices and accommodating the fluctuation would makes their lives a lot harder than necessary. For what return?

So?   It's a pretty easy business to be in while BTC is rising parabolically.  When it stops, and they are all now losing money on every transaction they process (which there will be a sudden avalanche of due to everyone holding BTC trying to get out of it),  I don't see how they will last.   

You mean the one payment processor, Bitpay.  A company that is still living off VC money and thus can afford to burn investment cash to run a risky insurance hedge until it runs out.   Then what?

The senate didn't say anything they couldn't easily backtrack on later if it suits them.  It certainly was not an endorsement, only a rather bland concession that virtual currencies (not, specifically, bitcoin) should be watched, but not touched, for the time being.

Companies accepting Bitcoin is great but it means nothing long term.  There is nothing preventing them from taking down their bitcoin windows stickers when they feel like the extra volatility isn't worth the extra business any more.  And the media will eat this up:  "All across the country, more and more businesses are fed up with Bitcoin and pulling the plug"  

It is rising as fast as it is only because transacting in it is terribly disincentivized (which is the complete opposite of what it claims). 
You can't spend it easily, and you can't change it back into fiat easily. Once people who bought in figure this out, what else is there to do but hold it?
And this kicks off the recursive bubble process:

People don't want to spend it because they'll lose out on market gains.  When I say 'spend' i am also referring to buying fiat with it, not just goods.

No spending = supply bottleneck #1, causing it to become harder to buy, making it in higher demand, reducing incentive to spend it even further, bottlenecking supply further still, raising value, etc.  Inflate the balloon.

Not only do people not want to spend it, it is exceedingly difficult do when you do. I am not talking a handful of token "look at me hop on the bitcoin fadwagon, gibe me free press coverage nao thx" pizzas and subway sandwiches and VPN accounts here, i am talking real consumer economy-driving spending. 

And wait till mom and pop average figure out how hard it is (if not impossible) to get any hard cash funds out of any exchange (i am looking at you, Mt.Gox, with your 7 day email response times), particularly US$, and most acutely when they *need* it back for holiday shopping. Cue flood of evening news hit piece stories on the long faced sad sacks and bag holders who are astonished to find that they can't buy their family Christmas presents because their bitcoin 'bonanza' is useless as a means of practical day to day commerce.

I suspect that up to half of the apparent "popularity" of Bitcoin the past 4 weeks or so, is entirely due to the friction of moving funds in - and especially out -  of Bitcoin.   

And when the upper middle class to wealthy Chinese who only care about Bitcoin as a means to move RMB out of china into USD under the radar, find out just how much of a pain in the ass it is to turn it into USD, their support is going to disappear in a puff of panic.

I believe in the underlying concept of bitcoin but I am getting the feeling it is going to die from over exposure before it is ready to handle the attention.

I would love to see some kind of parity with or incorporation of
the word 'dollar' and its credibility halo effect,
but it might be too much to ask what with BTC / USD exchange rate
getting bitchslapped all over the place by FOREX and commodity traders
and (probably) North Korean operatives,
who only stop working on their bots long enough
to pinch themselves and make sure they are not dreaming this all up. 

also, lol. BTChslapped. 
sigh.

I think we just need to start using average person-friendly shorthand names for smaller divisions.   "mBTC" and "uBTC" sound alien and clinical and even after they become familiar they remain are ungainly to use in casual conversation. "Micro", "Milli" and "Nano" sound overly techy and convey a sense of "minisculity" which won't feel right when they are used in trade for real-world things like taxicab rides and movie tickets.  I was thinking something like "mikeys" and "millies" for microBTC and milliBTC respectably, and "Nannies" for nanoBTC.  Yes that's my username so I might be biased, but this is how I bounced the terms off a few of my non-BTC-aware associates in conversation while explainng that Bitcoin can be denominated much more flexibly than dollars or euros, and phrases like "so you'd pay 9 or 10 mikeys for a sammich and chips, point your phone at a QR code and map, paid and on your way.." seemed to roll off better than trying to use a term like microBTC or "A few thousands of a Bitcoin".  If not those terms than something else, so we can talk about Bitcoin without sounding like geeks trying to spread a technology fetish around. 

So I think it is clear that for Bitcoin to become established past this initial hype phase, it needs to be capable of replacing ordinary fiat-based transaction functionality. 

My understanding is that mining is also the means by which transactions are recorded in the blockchain, so mining and transactions are inextricably linked.

So, already it takes quite a long time to confirm a transaction, not to mention the problems that arise with the natural scarcity of BTC (Coinbase) which seems to be an argument against it becoming a practical means of replacing fiat anytime soon. But isn't this the narrative that is driving up the adoption and acquisition of BTC right now (and for the forseeable future), particularly by non-techies?  They hear "It's not a bubble, it's a foundation for replacing money-as-we-know-it!" and this comforts them that they are not buying into a gold crash 2.0 or tulip mania 2.0 or the housing bubble or magical beanstalk futures etc.  But it seems to me that once there is no practical way to mine BTC any more, the considerable cost of running a mining operation will clearly be a bad investment for anyone who is not doing it as a hobby (and it's already well priced out of hobby range at this point), so real, grown-up business decision factors will be at play.   And if mining cannot keep up with the scaling of transaction processing nor satisfy the need for Visa-like instant transactions, causing them to slow down even further relative to the increased adoption of the currency, who will use BTC?   It only takes a few bad stories to tilt the media toward "Today, yet another early Bitcoin adopter, $RETAILER, has just announced they are no longer accepting Bitcoin!!!1!!1one"   

Hunch:   The biggest long term investors in BTC, for better or worse, will be the major credit card companies, who will use their massive existing data center infrastructure to take over the transaction processing burden from the hobby miners in order to ramp up and collect transaction processing fees.   

Also... What happens on Black Friday when Joe Sixpack BTC investor, who was only persuaded after a lot of cajoling by his kid/coworker/news story to give Bitcoin a try and dumped $5000 from his 401k or savings account into it, attempts to pay with (or just simply convert into fiat) some of his newly inflated BTC to do Christmas shopping... and finds out that actually using it is a *lot* harder than it was made out to be by his Bitcoin-evangelist friend?  I have a feeling that Nov 27,28,29 will be a very interesting test of the average person's confidence in Bitcoin for this reason.  Yes I know the USA isn't the only bitcoin participant, but a *lot* of countries celebrate Christmas now, or are affected in some way by the sales cycle it creates.  The news media loves this kind of "poor average joe" themed hit piece, because there's a huge audience of frustrated haters brewing, those who missed out on the last 6 months and are tired of hearing about how that one guy down the street made $20,000 on his $500 investment.

Made another of these Gox order book time lapse vids to help me better get a natural feel for the behavior of the BTC/Dollar relationship as it reaches and passes headline-grabbing milestones.  This follows a similar vid made when it passed $500, though I compressed the timeframe a lot more (30 to one instead of 10 to one), which makes it more fun to watch. 

made mostly for my own enjoyment as to help me learn about both Bitcoin as well as how to use YT, but i hope other folks find these informative as well.

https://www.youtube.com/watch?v=TWWWE96X4Qw

Hi all,  just wanted to let you know there's a video on YT up that shows the MtGox order book over a 10 hour period from a couple hours before and a couple hours after the 500 USD mark was passed.   I realize that Gox isn't the end all be all of BTC exchanges, but I thought it was useful to see how the buy/sell patterns behaved during the break in video form, it gives you a different feel for it than the ticker graph alone.

Also, my first YT upload ever. yay for me.

http://youtu.be/nmfX09BSuZk