It's not easy considering
Gresham's law. As long as weaker currencies like fiat money ("bad money") are widely accepted, people will opt to hoard away "good money" like bitcoins.
If/when Bitcoin achieves a sustainable economy where there is no need for fiat inflows and outflows -- meaning supply chains and payrolls are covered in bitcoins -- this can change. If people are getting paid in bitcoins, they will feel more comfortable spending them. As it stands, spending bitcoins and rebuying them later could entail lost bitcoins because of conversion/exchange fees and rising price. For most people, it makes more sense just to hoard their coins and spend fiat money on consumer goods instead.
Absolutely, but this is kind of a chicken and egg problem. To drive out volatility/"bad money", adoption must be rampant. For adoption, volatility needs to be driven out.
There's got to be some kind of gradual, seamless transition from good and bad money co-existing to one being the dominant driver.
We can hope for that, but honestly, it's impossible to know what the transition from state-backed to decentralized currencies would look like. We don't have precedent for it. Theoretically, it could be a turbulent event like USD hyperinflation that causes a fast and violent transition. If fiat currencies are crumbling, people will want to be paid in stronger currencies.
I'm not sure that volatility needs to be driven out for mass adoption. A volatile Bitcoin simply needs to be better than the alternatives.