Buying groceries from the local shop or your morning cup of coffee

Not really

Right now, Australia has both stable fiat currency and extensive electronic payment options.

Until we get to the point where we distrust the government, Bitcoin is not very useful for local shopping.

Everyday shopping on the Internet

Not really

We have plenty of reliable third party payment, such as PayPal, Mastercard, VISA, and others.

Maybe Bitcoin has enough advantage in lower transactions fees for larger purchases where customers are charged a transaction fee that it is worth it, but right now I don't think it is really needed by the majority of people.

Note also that you need to have even greater trust in the merchant if paying by Bitcoin, as third party payment mechanisms can be reversed if the merchant never delivers, whereas Bitcoin, like cash, can't.

Should merchants accept Bitcoin, even if there are few customers using it

Why not, if it doesn't cost anything

Online shops could probably benefit from being able to transparently accept payment via Bitcoin (especially if fees turn out lower), but there may be some fixed costs in supporting it as a payment alternative.

High transaction fees have seen it dropped by some providers, but initiatives like TravelByBit are a good step. If the cost of providing the additional payment mechanism is close enough to zero, then having as many merchants as possible accept bitcoin, even if it is rarely used, is a good way to increase the network.

Funding causes censored by the government, or purchase of illicit items

Yes, useful

This ranges from supporting causes like Wikileaks, where governments have put pressure on traditional transaction providers to deny them service, through to grey and black markets.

Full disclosure: the political party I support has a policy of decriminalisation and legalisation [https://www.ldp.org.au/drug_reform] of currently illicit drugs; under the current laws a lot of the harm caused by drugs is a direct result of prohibition, and in this respect the availability of Bitcoin and black/grey markets actually reduces the damage done.

The unbanked population

Yes

I agree with Aleks that this is potentially one of the biggest growth areas.

Many of the world's poor, despite impoverishment, have leapfrogged straight to mobile Internet; in the absence of an available banking sector, Bitcoin has an opportunity to be *the* banking solution for these people.

International travel

Sure

This is an interesting scenario -- rather than constant currency exchange (along with the inability to get rid of coins), Bitcoin at airports (such as TravelByBit) makes some sense -- although existing credit cards already work fine for that (even with high exchange costs).

Large purchases

Makes sense

It is probably a bit uncomfortable to walk around with $30,000 cash (a car), or even $3,000 cash (a purebred puppy), and even if you have a credit card with a high enough limit the fees may be too high (and ma

rgins too low) to be viable, especially if it is the sort of thing where you want to inspect and exchange on the spot (rather than do a bank transfer).

The usual solution for these sorts of things is a bank cheque, but Bitcoin could remove the hassle of having to visit a physical bank, if the fees are low enough.

Real time payment systems, such as PayID that just launched in Australia, may intrude in this space (depending on the fees).

Settlement layer

Yes

Sure, but not really relevant to the average user.