The main reason I don't think it would work in the mainstream is because it's too easy to scam and be scammed. Would local police get into bitcoin theft? Would there be a new form of digital currency police agents highly trained in bitcoin chain tracing?
There's been a ton of people over the last year that have scammed people out of $100,000 or more. InstaWallet could be one of the people scamming (claiming they got hacked when in actuality the owner stole all the bitcoins for mass profit). There's multiple cases where online retailers became highly rated then one day stopped sending product while still collecting bitcoins then just vanished.
I don't think it was designed to be a mainstream currency and I don't see how it could become one. But for illegal activities it's the bees knees.
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