Not only that, but as the number of merchants who take payment...

Not only that, but as the number of merchants who take payment in bitcoin increases, there will be less need to convert your bitcojns to currency at all. Obviously the value of bitcoin will adjust itself to take in to account various fees. Ie. the price of a widget in bitcoins will change to reflect all the fees and conversion costs.

If people start using their bitcoins to pay for things directly in bitcoin, the banks and visa will want a part of the action. They will not want to see transactions bypassing them altogether. You can bet they are already acutely aware of this, and at some point I suspect we will see a big bank roll over and get on board in some way.

I just can't see this fading away, it has too much momentum behind it, and some big money.