Venezuelans turn to Bitcoins to bypass currency controls

Your forgetting about counter party risk: http://www.investopedia.com/terms/c/counterpartyrisk.asp

Any time you hand something of value to someone with the expectation for future gain it's a risk. Suppose they setup two independent companies one makes major bet's ignoring price drops and another major risks ignoring price gains. By ignoring the risk they undercut the market. If the market is sable they make money. And their downside is limited to the value of those tiny companies plus the loss of one means gains in the other. Should one fail just start a new one rinse and repeat. In theory you could set things up so either no movement or any movement was a gain as people first handed you the money for what amounted to IOU's backed by junk bonds, stocks, tulips, or crypto currency's.

PS: Do this with 100's of millions$ and you either get rich or end in jail. Do this with 100's of billions and you often get bailed out.

Bitcoin's adoption continues to increase. Make no mistake about this. It is far from having "petered out": http://avc.com/2014/10/bitcoin-adoption-metrics/ More and more people in China, Venezuela, etc, are using it to bypass currency controls. The problem was the media was hyping Bitcoin and making it sound like it would become instantaneously popular overnight. Instead, it is a process that will take some time. That is all.

If, by "petered out", you were referring to the current downtrend in price, well IMHO the explanation is much simpler: Bitcoin users are just selling coins to pay their income taxes, before the IRS deadline of October 15, 2014. My reasoning is as follow:

(1) a lot of Bitcoin users are American, so they fall under IRS U.S. tax laws

(2) most users realized incredible gains during the 2013 tax year: Bitcoin went up 5700% from $13 to $750 between January 1 and December 31

(3) 2013 was the first year for which the IRS published official Bitcoin guidelines (http://www.irs.gov/pub/irs-drop/n-14-21.pdf), thereby enticing many users to pay taxes (and no, unlike what the media like to say, a lot of us are not anti-government anti-tax punks - we like to stay legal, pay taxes, and legitimize Bitcoin)

(4) because a lot of Bitcoin users became "accidentally" Bitcoin-rich (with little or just a normal amount of other USD-based assets), they have no choice but to sell coins to pay taxes on their Bitcoin gains

Let me tell you I experienced this first-hand: I filed for a tax extension to pay on October 15 instead of April 15. I knew my taxes would probably be around $100,000, and when my accountant was done (a few weeks ago), it was indeed about $100,000 in taxes. I had always been planning to sell coins to cover this amount, but seeing how much BTC lost value in the last weeks/months, I decided to scramble and use money from elsewhere to pay for the taxes. But I am sure that many other Bitcoin users don't have a financial cushion to be able to pay a bunch of taxes at the last minute. That's why I theorize the current downtrend is caused by people selling coins to pay for taxes. In fact, if my theory is right, there should have been a dip around the time of the first deadline for those who did not apply for an extension (and had to sell coins to pay taxes by April 15), and there WAS one exactly at this time! In fact I predicted this dip back in April: https://plus.sandbox.google.com/100577178258662783679/posts/...

>Too bad Bitcoin couldn't be used that way without a smartphone,

I think the minimal secure interface is something like a Trezor, which is pretty similar to what you describe.

Anything without some kind of confirmation UI can't possibly be secure.

The point is you get a fair, unregulated, market exchange rate of Bolivars to USD (or Euro or Yuan or whatever) via bitcoin currency. At whatever that rate is based on supply and demand and you can transact at that rate.

Currency controls mean "we the govt. say our currency is worth x USD and you must transact at that rate" which kills the market and means zero USD sellers.

I'd expect the USD to Bolivar rate via bitcoin to be significantly more Bolivar to USD than the "official" rate. In a sense this is nothing especially new in markets. You could always get a wildly more favourable rate for your USD behind the iron curtain on the black market. Local currency is worth something, people will take it at some value. Even zimbabwe, just add a bunch of zeroes...

would they sell "things" for bitcoins?