[freehunter]

Problem is, PayPal et al work in government-backed currencies. You can expect that when someone pays you $1 over PayPal, you'll get $1 worth from it (regardless of how many Euros you'd get for that dollar). However, with Bitcoins you'd be running into the issue of a double exchange. First you'd have to trade your dollars for Bitcoins, transfer the Bitcoins, then trade them back into dollars. You'll always get 1BC when someone sends you 1BC, but from the time that BC is bought to the time it's converted back to dollars, the currency could be worth a lot more (or a lot less).

Dollars are not inherently better, but at least I can immediately spend one and get a soda from the gas station. Until Bitcoin reaches that point, people will be sending dollars over Paypal.

[DTanner]

That's why I said "eventually", the user-base isn't quite there yet. I could see people just keeping $50-$100 in Bitcoin permanently to use for small transactions, much like I always have $100-$200 in cash in my wallet for small purchases, or $1000-$3000 in my bank account just as a buffer.

I don't see that happening anytime soon though with the huge volatility.

[weavejester]

Needing two exchanges instead of one is a disadvantage in the short term, but a big advantage in the long run, because the receiver of money can whatever exchange they prefer, rather than they expect to be most popular with their audience. In essence, Bitcoin is an open protocol for electronically transferring wealth.