Bitcoin has the potential to be the global currency. However it has several usability issues. One such issue is the minimum transaction size and the non-proportional fees. (Speaking of fees, is there a single sentence explanation?)
I have seen some discussion on micropayments. I believe that eventually everyone will come around to the idea that we need micropayments. However I want to speed this consensus up by basically remarking that there is no such thing as a micropayment.
Micropayments of arbitrarily small value sizes are already handled well by online wallet services such a Mybitcoin.com. A secure cellphone interface, such as is used by M-Pesa, will come much quicker, and be more widely adopted than a cellphone client. I want an independent smartphone client, but it's not realisticly needed for the vast majority of users. These 'bitcoin banks' are, truthfully, a partital centralization of the Bitcoin system; but the key is that the user
always has the option of switching wallet service providers or using his own client.
These wallet services will become somewhat ubiquitous, and over time as the Bitcoin economy grows, the current p2p network will trend towards being a form of major settlement backbone; while the average user with a cell phone, wallet services provider (which could easily be his actual cell service provider, as M-Pesa is actually run by Vodaphone) and a cell phone app to securely interface with his wallet service, and not directly to the Bitcoin network. As this occurs, wallet service providers are likely to develop their own parrallel network to allow them to interact directly, and thus reduce the number of bitcoin transactions that actually must hit the network. Imagine it like this...
Joe has an account on Mybitcoin.com, and a widget on his phone to let him sent coins to any bitcoin address. Jane has an account on MtGox, and Ron has a client running on his home computer. Both Jane & Ron need to send a small amount to Joe, because they are sharing the cost of a dinner out (before their California 3-way) and Joe is paying the check with local fiat currency, and the others are paying him back. Jane uses her cellphone to tell MtGox to send some to Joe's address. MtGox immediately checks it's own records to see if that is an address that belongs to a MtGox member. It's not, so the next step is to reach out across the parallel wallet services network to see if that is an address connected to an account with one of it's competitors for which it has an agreement of mutual settlement. Mybitcoin responds that it belongs to a member. MTgox doesn't care which member, only that they have a settlement agreement with Mybitcoin. So Joe's Mybitcoin account is credited, Jane's is debited, and sometime later the accumulated imbalances between MtGox and Mybitcoin are settled in one, much larger, lump sum transaction. This all happens before Jane can pull her finger away from the "send bitcons" button. If both Mybitcoin and MtGox both have a large user base (each is already in the tens of thousands) then most of the transactions between users of each tend to balance out, so settlement would become rather rare. However, Ron uses his cellphone remote control client (or a native android client) to send Joe theat same amount over the Bitcoin p2p network directly. Ron doesn't trust wallet services, which is his right, but then must (likely) pay a transaction fee to make certain that Joe will have his coin before the night is over, since Mybitcoin won't credit Joe's account before at least a few confirmations.
I hope that I have illustrated here how Bitcoin
can serve as a micropayment currency system into the indefinate future, even though the above scenario isn't yet possible. The economics provide for the above scenario to be
probable. And the only thinkg that prevents this from happening is a secure and standardized parallel communications network for which bitcoin wallet services can develop theses kinds of interparty trust agreements around.
