I've racked up quite a few bitcoins myself, and purchased some. But with the price roller coaster and ever-rising difficulty, why would this or how could this EVER become a usable currency?
Here's some things that have bothered me about the currency.
1) Not enough people own any of the currency, and retailers will never bite.
You need much more than a couple hundred thousand people to have a currency. Also, it doesn't really work when a very small amount of people have such a large chunk of the total currency. And why would the rest of the world consider it valuable? Ever?
Say myself and a dozen friends come up with a design for a physical coin made out of wood, lets call them woodcoins. However, for a woodcoin to be worth anything within our group, it needs to be hand carved with a specific and complex design. We then start trading and buying eachother's woodcoins as a hobby, and the "value" within our group starts to get high because the ones that have the most are considering themselves "rich". Does the rest of the world care what these wooden coins are? No.
Ok, so let's find some small mom and pop shops that will accept these woodcoins because they have value to us. They find that we would purchase them back from the shop for real cash, because we believe they have value. So the shop sells t-shirts or other cheap crap and will accept the woodcoin as payment, and then immediately go back to sell the woodcoin back to someone else in the group. So the woodcoins never really leave the group. Why not? Because the shop can't buy it's supplies to make it's product using the woodcoins, and it can't pay for it's rent and utilities using woodcoins, they need real world cash.
Eventually, the shop stops accepting the woodcoins because it's more of a hassle than just dealing with straight cash, and it's also unpredictable since the value is determined within this group of a dozen people and they can lose out any time if the price drops. Shops don't want to gamble, they want to make a steady cash flow.
Exactly the same argument PayPal had at the beginning. Online and B&M shops wouldn't touch it with a ten foot pole. Guess what? They ended up embracing it. Now a lot of those shops wished they hadn't touched it. They're in search of an alternative. I wonder if anybody on this board can think of one.
Bitcoin: An Idea Worth Spending