> in an ideal Bitcoin economy people wouldn't need to convert to USD
You're describing a situation in which the economy is split into two parts: a dollar economy and a Bitcoin economy. (I will assume that the Feds will come down hard on any "hacks" that make it easy to convert between the two without a license, like they did on offshore gambling sites and AllofMp3.) Experience proves that kind of situation just isn't tenable. Cuba and North Korea just about manage it, but only because there are lots of other barriers separating the two economies.
And anyway, we're talking about the here and now. Do you think the Bitcoin speculators and Silk Road traders are in it for the lols? Dream on.
What no one, the bitcoin community included, anticipates is hundreds and thousands of competing cryptocurrencies around the world.
For time eternal, government has risen among traders to enforce commercial rules.
Currency is like electrical current. It flows and the total currency system--all users--seeks equilibrium on it's own. When you've got currency you have to fend against spouses, family, friends, external competitors, the state, lawyers and nature itself to maintain your position.
> What no one, the bitcoin community included, anticipates is hundreds and thousands of competing cryptocurrencies around the world.
No one anticipates it because it makes no sense. Nobody _wants_ hundreds of thousands of cryptocurrencies: Metcalfe's law and the inherent costs of currency fluctuation risk tell us that the number of cryptocurrencies will remain small.
You're describing a situation in which the economy is split into two parts: a dollar economy and a Bitcoin economy. (I will assume that the Feds will come down hard on any "hacks" that make it easy to convert between the two without a license, like they did on offshore gambling sites and AllofMp3.) Experience proves that kind of situation just isn't tenable. Cuba and North Korea just about manage it, but only because there are lots of other barriers separating the two economies.
And anyway, we're talking about the here and now. Do you think the Bitcoin speculators and Silk Road traders are in it for the lols? Dream on.