as Bitcoins become more difficult to mine there will be a tendency for individuals to hoard Bitcoins, thus reducing Bitcoin transactions
There has, is and always will be (hopefully) hoarding. (I say hopefully, because that means there are those who expect it to hold its value or to increase in value over time).
That doesn't mean bitcoin will not be used widely as a currency for commerce. That is because because unlike most other commodities or investments where hoarding occurs, bitcoins can be easily and inexpensively exchanged into and out of other types of money. This is because Bitcoin has advantages to merchants over other payment networks. The advantages include:
1.) Low transaction fees. A merchant gets bitcoin payment "at par", meaning because the fee is paid by the sender, every bitcoin payment is received 1;1 (When a customer pays 1.0 BTC plus the transaction fee, the merchant receives the full 1.0 BTC). Compare this to PayPal, which, in the U.S., is $0.30 + 2.9%.
2.) Funds can be spent in minutes. When a merchant receives bitcoins as payment those funds can be used for spending without having to wait. Compare that to a Visa/Mastercard payment network where "settlement" first needs to complete before the merchant has access to those funds.
3.) No chargebacks. If funds are to be returned, such as for a customer refund, the merchant has full control over the process. There is no way to reverse a bitcoin transaction so no surprise "reversals" occuring 60 days after the sale, for instance.
4.) Universal funds. There is no difference in the process of sending bitcoins to a neighbor down the street as when sending to a supplier on the other side of the world. Without an intermediary, there are no cross-border fees. When there is the desire to exchange between bitcoins and other currencies, bitcoins can be bought in the sender's local currency and the recipient can exchange them out in their local currency.
These are advantages that no other payment system has. Consider the situation where gas stations provide two prices, the listed price for those paying with a credit or debit card a lower price (discounted about 3%) available to those paying cash. To save the 3% customers forgo the convenience of using a credit card. It already occurs due to reasons including #s 1-4 above where merchants today prefer to accept Bitcoin for payment. As a result, we are starting to see where discounts are offered to consumers when paying with Bitcoin (e.g.,
http://www.etsy.com/shop/tinaproduce offers a 5% discount) and we are also starting to see merchants who have a competitive edge on pricing due to only accepting bitcoin as payment (e.g.,
http://www.bitcoindeals.com ).
Additionally, there are situations where the customer prefers (or insists) on using bitcoins as payment. If you were hoarding bitcoins and now wish to spend some, or your business receives bitcoins then you hold bitcoins already and then want to spend them directly instead of having to exchange them out to a government currency.
As a result, those thinking something better than bitcoin will come along are, in the meantime, missing out on what really is occurring out here in the real world. Bitcoin's reach is growing daily -- there are today exchanges for trading Bitcoin in and out of more than two dozen currencies, a merchant directory that is growing daily, and a continuous influx of very motivated and bright people collaborating on ways to cause Bitcoin to serve us in more ingenious ways than we could have imagined just a matter of a few months ago.
