It seems to me that two things have to happen for Bitcoin to become more widely used.
1. A programme needs to be available to allow people to buy and safely hold Bitcoins that is easy to use and not time consuming.
2. Bitcoin would need to be priced and tradeable on a major exchange that people trust to provide neutral pricing data and protect their transactions.
One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?
Naomi
Have a look at blockchain.info or StrongCoin.com - they run browser based wallet websites that use encryption in the browser to protect your keys (and bitcoins). They can't steal your coins (as was a problem with early web based wallets). You can save a backup of the keys so that even if the sites get shutdown/vanish you still have full access to your bitcoins. These are very easy for beginners to use.
Also there are light-weight clients like Electrum that don't download the whole blockchain.
Regarding exchanges - there are quite a few out there now around the world. At current trading volumes it would seem only MtGox has a worthwhile business and the others are treading water waiting for more volume. Government regulation is the biggest hurdle for these businesses and after that the established financial system seems to be waking up and becoming aggressive against Bitcoin.
IMO Bitcoin needs to viewed as a commodity like gold and dealers need to be as common as jewelers worldwide. There are some small beginnings in this respect. There is websites for OTC (over the counter) trades and for locating local traders to deal with. You should be able to trade some as easily as walking into a 7-11. The more Bitcoin stays out of the way of the "dominant financial system (Wall St banks)" and grows it's own physical network the better chance it has to be strong and resilient.
In the US it's the "Bank Secrecy Act" that appears to be relevant to regulating money exchange and making life harder for Bitcoin exchanges. Other countries have equivalents that have been put in place under US pressure and international treaties.
Again IMO the most appealing aspect of Bitcoin is the potential of giving back control of money to the people. It's the ultimate democratization of money. You can be absolutely sure that those holding the reigns now aren't just going to roll over and let that happen.