I've badly expressed myself. Think "values" as "value of a variable". It's a way to securly transfer number ("value of a variable") no matter how much said numbers are worth ("value in real-world money, as you point").

You can if you run this business by making all calculation, account keeping, etc. using your local currency.
Keep the "bizare magic numbers that change often" only for the time payment are made (well actually, in practice, it's bitpay, coinbase and such who will do it for you but you got the idea)

Show your price in USD.
Store your fortune into a bank account in USD.
Only use BTCs as a temporary intermediate when doing payment with the bitcoin protocol.

So that is why, in the current situation, amounts expressed in BTCs should be left out of the picture. They will not remain meaningful in any way.
The merchant keeps his books and his accounts in USD.
I keep my accounts in CHF.

See the example I mentionned before:

If you neglect the amounts (I don't spend that much on video games), that's an actual real world example of me buying games online from Humbe Bundle.
(The only differences are: I don't spend 100$ in one go on games. Much smaller amount on each bundle I buy. I also don't buy bitcoins right before each time I spend them online. I'm actually crazy enough to hold an account in BTC on my own copy of the client. But I don't hold more than I'm ready to lose).
Otherwise, that more or less the exact way it's done: store your fortune in a fiat currency, occasionnally buy BTCs (using localbitcoins e.g.), and spend them online on goods. On the other side of the transaction, the merchant gets USD (from coinbase/bitpay/whatever the merchant decides to use).

To get back to your example of grocery: it doesn't matter much. You pay your grocery using a stable real-world money (USD) and the merchant got a stable money (USD) into his/her account. The actual amount of BTC which got exchanged behind the scene is irrelevant. Maybe this week it was 0.2 mBTC, last week it was 10'000 BTC and next week it will be 20 BTC.
That doesn't matter. You handle USD so you aren't affected by the fluctuation much. The merchant handles USD so he/she isn't affected much neither.

Only grocery is a bad example, because you usually see the merchant in person face-to-face, so you might as well just give cash instead, and don't bother with intermediate forms.
bitcoins start to get useful when shopping online, when you need the equivalent of sending cash person-to-person but over the internet.

The volatility issue won't be the first one to be addressed. It's going to be the other way arround.

Currently, by going through an intermediate we already have a way to use bitcoins.
They are already useful now, despite having an unstable value.
The unstability is just "hidden away" behind the intermediate who do the conversion for the people involved.

This system might be a bit cumbersome (both the merchant and the customer need to use some intermediate as of today).
But it already offer a few advantages (As I've mentionned in my post):
- complete freedom of choice of the intermediate
- no possibility of charge-back fraud
- as mentionned by others: no risk of theft (a bitcoin merchant doesn't have credit card number or other senstive data to leak. the bitcoin equivalent is the private key and that piece of information NEVER leaves your wallet).

That means that the current system is already desirable, despite the volatility (which is "hidden away") because its useful and has nice advantages.

Because of this, adoption is currently increasing over time: over time more merchant start accepting bitcoins (or more precisely: more merchant start using bitcoin payment processors, so their USD/EUR/whatever come not only from PayPal etc. but also from bitcoin-based transaction. But that's a technical detail - in the end that means that more merchant have a "bitcoin accepted" option. The rest is just behind-the-scene details so the merchant isn't affected by the volatility).

As bitcoin transactions increases in volume, their influence on the value of bitcoin increases. As the value of bitcoins is getting more influence by the market, and less by speculators, the price will stabilise and the volatility will progressively decrease.

Only *AT THAT TIME* is the Volatility addressed. And some actors might try slowly and carefully removing the intermediate, and actually use BTC as a currency.
(Several payment processors are even built to ease this transition: merchant can set a percentage of the incoming payment to be kept in BTC instead of converted to USD. So instead of risking 100% of its money on bitcoin, a merchant can decide to retain 80% in a classic stable currency, and only play the bitcoin roulette with the rest)

Maybe, at some time, some bitcoin merchant will work entirely with BTCs.

To make short, your approach:
"Make BTC less volatile, and then it has a success of becoming a currency" is wrong.

What we do is:
- Do not care about volatility now. Just don't give a fuck.

- Use bitcoin protocol as a payment method (it has useful properties)
- Find a way around volatility (using payment processor and other such intermediate that "hide away" the volatility. everybody currently works using fiat).
- Because of the 2 above, bitcoin can find a legitimate use as payment method, already today
- Bitcoin payment currently gains acceptance and slowly becomes widespread
- Speculation is proportionally becoming less determining than business for the price of BTC
- As size of bitcoin market (as in: merchant using bitcoin protocol for payment) increase, the price of BTC (As the virtual currency) stabilize
- Now the volatility is gone, as a result of the usage of bitcoin
(It is not the diminishing of volatility that is a cause of increased usage, but it's the increased usage that is cause of the decreased volatility).

- Only at that point, some might start considering BTCs as a valid currency to hold into accounts and to do calculation in.

It is possible to already start using bitcoin right now for business, well before BTC is a stable enough to be used as a currency.

2 key points, 1st regarding internet availability, 2nd regarding connectivity requirement.

1.
Web access is surprisingly better than banking in some countries.
It doesn't require that much. Internet in these countries isn't necessarily running on a backend of copper telephone network set up by the government (which requires a big infrastructure working perfectly).

In developing countries you see lots of small companies jumping in and deploying cell phone towers (GSM) - they are much cheaper than a copper network, less likely to be stolen (you can't steal microwaves between tower. but you can steal copper lines between switches and try selling it for the metal's worth), can rely on batteries when power is reliable all the time, are way much more easy to deploy in remote rural areas, etc.
(That's why cellphone are much more popular than landlines in developing countries).

In worse environment, where Telco aren't interested in yet, or haven't invested already, there are people building networks on a shoesting budget with Wifi, mesh networking, etc.

You can actually be online, while at very lost and remote places.

Meanwhile, banking requires an established bank, with good trust, that foreign banks will accept doing business with, and that locals will accept having accounts.
That won't get seized by the local government or by revolutionaries. (Whereas if you telco goes bankrupt, just get a SIM for another one. If a terrorist attacks blows up the AP you usually connect to, you can find another one to use).

There are very remote place, lost small village, where you can still manage to have some form of online connection, while there are no banks in the vicinity worth doing business with.

2.
the bitcoin *network* requires that a big enough number of nodes are connected at the same time for the protocol to work correctly.
but payments don't require constant online presence.
you can actually send money to a public address which is not in a wallet that is currently connected to the network.
in fact, there are some addresses (like brain wallets, like physical coins, like brainwallet, like armory-generated address) that are by design "offline" until actually used. The paying party (the guy sending money) broadcasts the payment to the public address transaction to the whole network. But the receiving party (the guy receiving the money) keeps the private key secret and not connected to the network until needed.

in some case (armory) it's even possible to *spend* bitcoins while staying offline: the software running on the offline machine can sign a transaction and output a message, which can be stored onto a medium (usb stick, scannable QR-code, etc.) and transported via sneaker net to a point where it can be broadcast to the network.
normally, that was designed and is used most of the time for security: to provide an air gap between the web and the private key.
but the same can also be used for cases were immediate online connectivity isn't possible.

That makes bitcoin a potential candidate to help transferring value to the most remote corner of the world.

Do not think of it as a currency, think of it as a payment system.

It's a way of transfering value from person A to person B.

Unlike Paypal or Western Union, it doesn't rely on a specific company. (its a distributed protocol without a central authority).
Unlike them, you aren't forced to use the same system (if a merchant uses Paypal to accept payment, your only solution is to also use the same company Paypal, to send your payment. If a merchant uses bitcoins, the merchant could be using bitpay, coinbase, coinjar, or any other payment processor of their choosing. The customer doesn't need to use the same, and could for example be using something completely different like localbitcoins).
Unlike Paypal or Credit cards, there are no charge backs. When a payment is done, it's done. There's no risk of charge-back fraud.

In short, it brings the same kind of advantages that SEPA has brought to transfers between European banks:
- They give you both freedom (you don't need the same bitcoin system as the other person, just as you don't need using the same bank)
- SEPA is only between european banks, bitcoin is between anybody on the internet
- It's a bit faster. SEPA can take a few days to arrive, worst case a week. Bitcoin takes a few minutes to confirm, worst case an hour.
- SEPA is much cheaper than internationnal bank transfers. Bitcoin is even cheaper overall.
(And whereas webshop currently just have badges from 3rd parties rating their trustworthiness, future models can use some bitcoin protocol properties to even have 3rd party that can arbitrate in case of dispute)

Merchant will accept bitcoin (= payment using the *bitcoin protocol* for the payment transfer systems, just like they could accept SEPA for direct money transfer if they are in europe) by not accepting any bitcoin (by not holding accounts in *BTC currency* because at the current point, they are better used as an intermediate in transfers, rather than value storage).
Please make a distinction between the bitcoin protocol, and the BTC crypto-currency.

Guess what? Business ALREADY DO business using bitcoin and hold accounts in fiat.
Bitpay, Coinbase, and numerous other payment processors exist that make this already possible today.
Merchant sell they article in local currencies (as an example: Humble Bundle sells video games using USD) and Coinbase handles the behind-the-scene stuff for them (coinbase calculates the equivalent amount of BTC depending on the current exchange rate, and once the BTC are received, Coinbase exchanges them and credits USD on the humble bundle account).

The main difference with paypal, is that with paypal payments, both the merchant (Humble Bundle) and a potential client have to go through the exact same company - Paypal. No other choice. With bitcoin protocol, any of them can choose whatever they want. Humble Bundle could have chosen to use bitpay instead of coinbase, and that wouldn't have changed anything for me.

By doing the same at their end of the transaction. If people don't want to hold accounts in bitcoins (which, frankly, is wise given the current instability of the currency), they can just buy some as needed before doing business with some bitcoin-accepting merchant.
(For example, instead of holding an account with bitcoin, a user can buy some bitcoin through local bitcoins, and then spend them online)
(Or some wallet service offer the possibility to directly buy bitcoins).

Because not only BTC is a virtual currency, but also bitcoin is a protocol. And no matter what the value of the currency is, the protocol is still useful for exchange.

A merchant sells an item for 100$. That merchant will get 100$ credited on its USD account by bitpay once the bitcoins are received.
I will pay an equivalent amount in my local currency to get the bitcoins. I'll probably pay 120 CHF on localbitcoins.
Maybe behind the scene, 0.1BTC will get exchanged. Maybe next month the same transaction will exchange 10000BTC or 0.1uBTC
That doesn't matter. The fluctuation of BTC will be hiden behind the scene by the payment processing systems.

The only people affect would be those stupid enough that bought 10000EUR worth of BTC and are holding them in the hope that the price will increase 100x over time.
Anybody else will keep doing transaction as usual, no matter what.

The big difference already offered today is the freedom of choice.
I'm not forced to use MasterCard. I'm not forced to use PayPal. As long as the service I decide to use conforms to the bitcoin protocol, I'm free to use it.
I might avoid buying bitcoins with Coinbase, because that requires a US bank acount (which I don't have). I might decide to use localbitcoins because there I'll meet people who can sell me bitcoins with whatever works locally the best (done that in the past). I might decide that I trust BTC-e and I might decide to send EUR over SEPA to them, and convert bitcoins on a "as needed" basis. Or might be crazy and I might decided that I'll keep a small amount of bitcoins myself (not more than what I can accept to lose) using my own local copy of the bitcoin client (I'm actually that crazy).

The recipient of payment gone through bitcoin protocol has also already advantages:
Unlike MasterCard or PayPal, the merchant does not have risks of charge-back fraud.
Foundations accepting donations also have advantages:
Unlike what happened to WikiLeaks whose payments got frozen by MasterCard or PayPal, bitcoin can't be frozen.

Overtime, as the usefulness of bitcoin protocol increases, and as the impact played by speculator get diminished by the impact played by actual usage, the value of BTCs will stabilise.
Maybe at that point of time, bitcoin usage will be widespread enough that it would be worth holding an account in BTCs to be able to make payments with them, and the price will be stable enough that it won't be too risky doing so.
At that point, it would be possible to cut intermediates and even more lower the cost of bitcoin transaction handling.

Until then BTC will more be used as an intermediate step. But that specific thing already works today.

Or you know, you could actually use bitcoin for what it is designed:
a way to exchange money.

You can make money using bitcoin, by simply using bitcoin in your normal business.
I.e.: you can make money by doing regular business as always (except that you happen to be doing the payment exchange using bitcoin protocol, so you happen to be making money *while by coincidence you use bitcoins*, just like you happen to be making some other money while you use paypal).

Mining is only a very small part of the whole bitcoin story. And in fact, as you mentioned, is now only the job of a specific small elite.
If you really want to make something by mining, try mining an alt-coin whose mining is the most accessible to your setup, and use that coin when shopping online (or convert it on an exchange into a more widespread alt-coin if your favorite webshop doesn't happen to accept that particular alt-coin).

But please let mining aside and concentrate on what bitcoin is designed to be: a payment system with no single entity in charge.

The thing is, there is no single government on this planet, because we're not a single wolrd-wide country.
Whereas some government could go on an anti-BTC cursade (as thailand has done) other government could embrace the opportunities to developing businesses.
There will always be places where crypto currencies can develop.

Currently, bitcoin aren't useful for anything more than exchanging value between parties (between merchant and customers, or between donators and foundations).
So at some point of time it needs to be converted from BTCs to a local currency in order to buy food, pay bills, etc.
Thus, currently most of the fortune will transit in a local currency, which will be taxed accordingly by the government.
In fact most of current business opperate through a payment processor that converts currencies on the flight, meaning that currently, most real world transaction happen in classic fiat currencies the only differences being the behind-the-scene details how money got transfered (it could have been handled through a 3rd party like Paypal, it could have directly be transfered with SEPA or it could have been transited through bitcoin).
Accepting BitCoin for merchandise in fact means that the merchant will end up receiving USD or EUR and will handle them just like usual.

By the time BTC become accepted enough and stable enough to be worth keeping long-term under that form (That is going to take some time, trust me), you can be sure that the government will publish guidelines regarding the taxation of business done in that currency.
(Just the way that current governments have clear guideline regarding transactions and business done in foreign currencies)

Note that, due to the intrinsic security model of bitcoins (publishing everything in a public ledger that can be checked by anyone), no actual "audits" will be needed with bitcoins as all the relevant information will be publicly accessible to anyone.

And then it will be just a question of which government does what. Regions with governments going berserk will be at a disadvantage to region where business are let to harness the new opportunities offered by this new payment system.

Still, the "couple of minutes usually, worst case 1 hour" is better than SEPA's "couple of days usually, worst case 1 week".
(SEPA money transfers are the closest in the world of online buying to what bitcoin bring: end-to-end payment without any intermediate, without possibility of charge-back scams, with low fee and with high speed).

Also BTC isn't the only crpyto currencies.
Some of the later variants (like Litecoins and Primecoin) have faster confirmation time exactly for this reason:
to make direct payment more viable.

At its core, bitcoin is a protocol. A protocol used to exchange value over an untrusted network.
(Think of it as the main concurrent to Paypal and Western Union, think of it as the internet equivalent of what SEPA has brought between european banks).

No matter what the current exchange of a bitcoin, bitcoin will still be useful for its core target market: Online payment, people sending money abroad.
The only people hurt and throwing themselves out of the window are those who decided to hoard bitcoins and speculate on their value. What's problematic is holding bitcoins for extended period of time.

The people doing actual business in bitcoins won't be affected much.
At the end of the day, if I buy (using bitcoins) an item costing 10$ from a merchant, this merchant will still get 10$ (from the payment processor. Say bitpay, for example).
And will have spent around the equivalent of that sum in my local currency (say, I'll probably have paid around 12 CHF from local bitcoins).
It won't matter it in between, the number exchanged between the merchant and me where 10000BTC or 1BTC 0.2uBTC.

So even if bitcoins crash, they will still be completely usable for their planned use (intermediate in transactions). The only people affected are the one who held their BTC in the hope that they will be 1000000 USD per BTC whereas BTC ended up being worth 0.0001 cent each.

That comes into play if you store bitcoins long-term. (If you hold on them for months)
If you just buy them using - say - localbitcoins to make purchase (i.e.: spend them in the couple of days following you acquiring them) you're not affected much by the price fluctuation.
If the merchant on the other side of the transaction uses a payment processor like bitpay or coinbase, the merchant will get the money immediately and won't get affected at all by the price fluctuation neither.
You buy an article worth 10$, the merchant will get 10$ exactly, you'll pay a nearly equivalent amount of you local currency through localbitcoins (say, you'll spend around 12 CHF). This is valid today, last month or next year. It doesn't matter if the intermediate is 10'000BTC 1BTC or 0.000000001BTC.

The point of bitcoin is making a reliable transaction between 2 parties. Whatever the other party does after receiving the money isn't a problem directly linked to bitcoin. This could also happen if you gave USD/EUR to someone shady. Your ability to complain depends only on your ability to identify the merchant and on the jurisidiction where the transaction happened. If you wired money internationally to a bogus online pharmacy with no actual legal address that promised you cheap meds, you're screwed even if the money used was USD. If it's a real registered merchant in a country with a decent justice system, you can still sue the merchant even if the transaction occurred over bitcoin.

So don't complain if some new shady exchange runs with your money. It's not that different from trying to buy drugs from the first on-line pharmacy that you've found.

(When using a regular currency, you could still do something like a charge back if you went through an intermediate like a credit card or paypal. But that's a functionality that honest merchant want to get away from, due to the high amount of charge-back fraud).

Now notice that with bitcoin the situation is only a current temporary limitation, not a technical limitation. 2-out-of-3 signature scheme *could offer* some kind of security in such scenarios: a 3rd key could be used in case of dispute. (Note that unlike real-money escrow, the 3rd party never had access to the money and can't run away with it. Notice that unlike charge-back, it's not the same company being judge/jury/executionner at the same time. And like with everything else, your not restricted to any 3rd party, you're free to pick your best choice together with the merchant).

Paypal has a few short-comings:
- for a payment, it requires both the client and the merchant to use paypal's services. (both end-point of a transaction are forced to use the same service).
whereas with bitcoins, as long as both end-points use the same bitcoin protocol, they could be anything the user want. The merchant could freely pick bitpay or coinbase to get its payment processed and converted into USD, i might be buying my bitcoins over localbitcoins with CHF. Nobody is forced to use bitpay, or coinjar, or coinbase, or localbitcoins, or mtgox, etc.

- paypal can unilaterally decide to sport accepting payments and freeze an account. Via/MasterCard can stop processing donation. Whereas with bitcoins, I'm still in charge with what happens with the coins.
For reference, see what happened with the credit-card donation at wikileaks. the same is impossible with bitcoin. there is no single entity controlling the network that could decide what happens. only the end-points (merchant and client or donator and foundation) are responsible.

- paypal is a single company. if they go berzerk, or if they are pressured by the government, anything could happen. (See the previous 2 points). bitcoin is just a protocol. There's no single company in charge of it.

- charge-back fraud. (as in I buy something, and once I've recieved it, I file a charge back at my credit-card or at paypal) that's something merchant hate. and they have no choice with credit cards and paypal. but no problems with bitcoin: once bitcoin are sent, it's done. no risk for the merchant to suddenly lose money.

And even with "2-out-of-3" security the situation is different. The arbitration comes from a 3rd party that both the merchant and the customer have decided to trust. If such a security providers decide to pull some shit, it'll lose trust and next time burnt party will refuse. overtime you'll see the bad apples getting kicked out of business, and a small collection of good trusted escrows emerging (as an inspiration look at the trust labels on webshops accepting bank transfers). Whereas, currently, a merchant can only accept that charge-backs will happen when using credit-card and paypal, no other choice.

Fiat money has no intrinsic value. It's just some paper with some numbers printed on it. Some government has decided something and might be able to do a bit of something inside their own jurisdiction (like forcing by law people to accept some specific bits of paper), but that's about it.
Gift card have no intrinsic value. It's just a bit of plastic associated with an amount.
Prepaid wireless phone credits have no intrinsic value. It's just a virtual number inside the database of your service prodiver.
etc.

The only thing which have some intrinsic value might be precious metals, which have some physical and chemical properties making them interesting (which are also the reason why those metal started being considered precious to begin with). But please tell me when your local market starts accepting payment done with golden bars (or when they accept payment in chickens - as barter is about exchanging only intrinsicly valuables).

Virtually any payment system is done through something arbitrarily agreed upon. The only thing is how the value got agreed upon. It might be government, it might be a company. The only subtle difference with bitcoins, it that there isn't a single entity in charge. The value is reached by a whole network, where the decision is influenced by how much it is used for payment, and by the speculation about it is future, in a strange feed-back loop.
(Note that the initial value of gold and other precious metal has also been determined in this way. There's no "central gold agency" in charge of fixing the price of gold. The value of gold got settled on by the effect of its market)

You can say that you value Dogecoin more bitcoin. If more people agree with you, that might as well actually happen. If its valuable to enough persons, it will be valuable. (And that has historically hapenned with Dogecoin).
In the case of Dogecoin, most of the value was due to speculation, so the value changed as speculator decided to value something else more.
In the case of bitcoin, there's a big inertia, there's also a huge world-wide usage, so it's value doesn't depend on the whim of a few actors.
It's used by people for transaction, meaning that its valuable for people, so it has virtual value, same as fiat money, the only difference being that no government got involved.
Look at the recent series of crashes over the last couple of months. Even if the bitcoin has been a rough roller coaster as of lately, it seems to be trending to stabilise a bit around 1000$=1BTC. Because it's not only your opinion of Dogecoin vs. Bitcoin. But because there's a whole market, with billions USB worth of BTCs flowing regularily.

That's the point where I agree. BTC aren't an investment (at least not for anybody but the most bat-shit crazy speculators who enjoy really high risks).

In fact you shouldn't even consider bitcoins as a currency (well, okay, BTCs technically are a form of virtual currency) as much as you should consider it as a payment system.
BTCs aren't to be compared to USD or EUR, as much as BTC is to be compared to SEPA and contrasted to PayPal, Western Union, etc.

And from that point of view it brings lots of interesting new stuff: in terms of freedom of choice, independence from a fixed 3rd party.

compare what SEPA brought to payment between european bank. Bitcoin protocol is here to bring a similar bunch of advantages between individual and business across the internet: high speed, low fee, freedom of choice, etc.

  In fact, it may not even be considered theft, and good luck getting a government to actually bother prosecuting the exchange owners.

BitCoins are a solution in search of a problem:

They don't have anonymity, unless one does shell games with wallets. Might as use PayPal and have some added protection.

There are better investments. I'd rather invest in a crowd-funding site so a geek can get his latest app to market. If it fails, at least someone had a chance at a dream.

They have no intrinsic value. Dogecoin can be stated to be far more valuable. Why? Because I said so.

The target after which bitcoin system is going, aren't the other *currencies*.
The point is not to replace USD or EUR with BTC.

Bitcoin is going after system which transfer money. They point of the bitcoin system is to displace/replace PayPal or Western Union.
The closest thing which ressembles to what bitcoin brings to the table are SEPA payment.

Bitcoin (like SEPA) brings :
- Direct end-to-end payment without any intermediate (as long as both banks support SEPA you can send money accors. As long as both end-points support bitcoin protocol, you can send BTC accross). No need to get anyone else involved (you don't need MasterCard to come in do some shit).
- Complete freedom of choice regarding what you use (The choice of the SEPA-compatible bank that the merchant use, doesn't force me to use a specific bank. The merchant might be using some banks in Germany, and I might be at Raiffeisen in Switzerland. Similarily the bitcoin merchant can be using bitpay for seamless BTC-to-EUR payment processing and conversion, whereas I might be sending my coins from my localbitcoin account). (Compare the situation when paying USD online: both end of the transaction are required to by client at PayPal, for exemple). It goes even further in that SEPA can't directly send EUR from the wallet in your pocket, you need to have an account in a bank. Whereas you can send bitcoins from your own copy of bitcoin-qt client, from an offline armory, etc.
- High speed (SEPA payment take a couple of days, a week in worst case scenario) (bitcoin are even faster payments take minutes, a couple of hours in worst case)
- Low fee (SEPA payment between two compliant bank is a couple of EUR, bitcoin payment are the equivalent of a fraction of cents).
- No charge back. SEPA transfers, money hand exchanges, and bitcoin transfers: when it's done, it's done.
- No payment or account freezing. (All the complains against paypal are gone !)

In addition bitcoin goes a bit further:
- As mentionned above: bit faster, cheaper, than SEPA and you can even be your own bank account.
- bitcoin aren't geographically restricted (SEPA is Europe only. Bitcoins are internet-wide and even a bit more).
- bitcoin aren't fixed to a specific currency like EUR (you could have obtain your bitcoin using CHF, and the merchant you're buying goods from could be converting them to USD).
- a bank account could still be seized by government or law enforcement, whereas, depending on how you setup your stuff, you can be 100% in charge of your account. (possibility for 0% risk of seizing/freezing). That's negligible in the (somewhat) stable environment where SEPA is used, but that a very useful property for people living in unstable regions.
- possible implementation of security at the payment procotol-level. using 2-out-of-3 signature scheme you can implement trusted escrow-like system, except that the escrow CAN'T run away with the money by design.
(The security model is rather different than charge-backs, where the credit-card company or paypal function as jury/judge/executionner at the same time. The model is that in case of dispute, a trusted 3rd party can be asked to arbitrate how should get the money. That trusted party by design has nothing to do with the payment processor or wallet used by the merchant and client, and is agreed upon before hand. With credit cards, the merchant just has to accept that charge-back will happen).

bitcoin has some peculiar quircks:
- banking is about trust (your bank should be trusty) and secrecy (some countries like Switzerland are very paranoid about banking secrecy).
- bitcoin is about handling payment between untrusted partners, and the security comes by the fact that anybody can check the transaction, meaning that absolutely everything is broadcast to everyone else for verification purpose. Bye-bye secrecy and privacy, only pseudonymity is possible. (you can follow all transaction by account numbers, but you won't necessarily be able to stick an exact identity to each number).

You could use Python:
You need to write your own interpreter which takes scripts written in your special subset of python, and compile them into the special bytecode that the NFTable kernel interface uses.

The thing is, the internal representation of NFTables needs to be highly efficient (as explained by other posts here) and very likely the official NFTable bytecode isn't really feature complete or maybe not even turing-complete.
The current special language will map nicely to it. But you will probably need a very narrow and specific subset of Python. Or a vast a mount of pre-processing and optimisations. You probably will never be able to use the full extent of python on current ntfables and for exemple "import" nice modules in your network filtering code.

The US government want to exchange them for money.
Only the few major exchanges with enough USD reserve needs to coordinate. (MtGox, Bitstamp, and BTC-e maybe, I think), and the government is barred from exchanging them, and is forced to either only exchange small portions on exchanges that don't participate in the ban, or trying to find a direct buyer on person-to-person systems (like bitcoins).

Now all it takes is that only a single buyers accept the whole lot only for 1$ max. And the goes on to spend the acquired bitcoin on donation and charities. And thus becomes an instant bitcoin community hero.

There is no such thing as an "official blacklist".
On the other hand, bitcoins are traceable by design (the security of the cryptocurrencies works this way).
For any transaction, it's possible to traceback and see if the coins have been through the wallet that was identified as the where the government put the seized silk road bitcoins.

So when someone offers you a payment in bitcoin, you can determine if they are the governement or someone who accepted the government's coin.
Now it's up to you to decide if you accept those coins or not.

So even if the coin aren't really blacklisted, they could be effictively be refused by people who are pissed by the seizure of silk road.
On the other hand, nothing prevent other people who don't give a damn about them to still accept them.

We'll see which situation will predominate.

A third solution would be the major exchanges - the exchanges with the actual monetary reserve able to exchange that many bitcoin to collude and refuse accepting them, forcing the government to exchange through an person-to-person exchange (like bitcoin) and then some individual buyer accepting them only for a ridiculous price, well under market value... and than subsequently using the acquired coins at their current market value to give them away (charities, donnations, fawcets, etc.) in a way that is accepted by a big chunk of the community.
Such a coup would require coordination (hard...) but would insure that the government doesn't make much money, while at the same time avoiding a bunch of controversial coins sitting on a wallet.

And there are tons of such exchange.
Bitpay was mentionned, coinbase is another, and there are several others too.

And the peculiarity:
- With paypal (which is a particular online service), the only way to receive money from a paypal using customer is to use paypal your self, accept the payment to your business' paypal account and wirhtdraw it. You can't use anything else than paypal. And if paypal freezes your account, you're screwed.

- With bitcoins (which is simply a protocol), you chose were to receive your coins (official bitcoin-qt client, web-based wallet, web exchange, offline wallet, etc.) and you have the freedom to choose your methode to convert it back into your local currency (payment processor as mentionned above, or an on-line crypto-currency exchange, or person-to-person exchange like localbitcoins, etc.)
The choice of system of your customer doesn't impose anything on your choice of payment processing. And vice versa. As long as both end-points of the transaction use the same crypto-currency protocol.

Bitcoins brings to the whole internet, the freedom and easiness of payment that SEPA brought to european countries (except that bitcoin is much faster than SEPA money transfers).

They can *listen and read* everything we're doing. That's true. That has been suspected as a possibility by experts for a long time, and Edward Snoden's revelations are a comfirmation that it has indeed happened, and a revelation of the methodic large scale of the whole spying program.

BUT

The NSA doesn't have the ability to *decrypt* everything. They have the ability to make sure that the software you're using is broken and doesn't encrypt well, choses its key from a small pool of only 10 alternatives, or plainly leaks the clear text... or even hack you PC and put a keylogger in it... all this thanks to bugs carefully planted either by them (while undercover) or by the companies making the software (after paying them).
Also, if you're dumb enough to re-use password, any policeman with half a brain has the ability to first try all the passwords they already have to see if they can open the encryption without needed a password.
But the NSA can't magically pry AES open. That doesn't work. The maths and cryptology behind it are still sound. And bruteforcing it is in the "not before the heat death of the universe" range of time requirement.

Here lies the small distinction.

If you're careless about your secret stuff, at some moment or another, they are bound to hear something that will help them obtain your secret.
That's why NSA is a massive danger to the privacy of Joe Sixpack. He's careless, and his privacy is completely violated.

If you systematically follow proper security procedure (as in being anal-retentive about it, to the brink of sanity), NSA can nothing about you. That's how Edward Snowden manage to evince detection and to successfully orchestrate the whole leak. That how the journalists managed to keep the whole procedure secret. See Bruce Schneider's explanation about the security procedure).

There were recent report that indeed, NSA is drowning in too much information. Finding precisely what they need among the see of gathered information is hard (finding a needle in a haysack is hard. When you gather and pile all the haysacks you encounter inside a huge farm, finding the very specific needle you need is getting even harder).

The problem is everybody's privacy. While finding something precise is hard, accidentally landing on something sensitive is much more likely. That's why everyone's privacy is utterly fucked by the whole thing.

Answering open wide question is hard. "Where are all the terrorist of the world ?" is a complex request that can't be answered easily, even more so given the mass of data to scan.
Answering targeted small question is easy. "I want all the photo of naked people !" or "Please keep getting all the data feeds from my ex-girlfriend" are typical abuses that can be done more easily. "Please help me eavesdrop on my competitor" is a type of industrial espionage that can be done as an abuse of the current system.