I didn't write that last post very well. I meant it in terms of using it strictly as a currency, instead of using it as an investment opportunity. I fully understand the mechanics of monetary exchanges. The difficult part doesn't come up when you view it as an investment or an exercise speculation.
The difficult part comes when you see the opportunity to use it as a currency. A majority of real world commerce ignores exchange rates. If the dollar went down against the yen yesterday, you don't see prices change at WalMart today. Long term financial trends impact prices, especially in international commerce, but most people aren't ever aware of it except as soundbites from their favorite finance show.
Hypothetically: I charge 50 BitCoins as a flat rate to develop a forum sig. I'm an awesome artist, and well worth the price (I said hypothetically, ok?
) I get some 400 people buying sigs, and thus the market has determined that Mountain Man sigs are worth 50 BTC.
How do you get to the point where people think of the value as being 50 BTC, natively, instead of... "50 BTC is currently $700, therefore the sig is worth $700!"
From what I've learned over the last few days, the only way that people start using BTC as a reference is if the BTC "native" economy gets big. Use it often enough for enough different things and the perception stabilizes.
The way things are now, people use bitcoin as a proxy for their favorite currency, using the exchange rates to measure value. That will change and people will be able to make (and lose) money when/while that happens.
