> the cost and time involved in acquiring something as small as $3.99-$29.99 is quite high. It would likely cost as much as 10-50% of that cost in fees.
Where are you getting these figures? I can pay 0.5% in fees or less to purchase bitcoins on MtGox. Other solutions are nowhere near 10%.
Okay, but that 11% figure is mostly because of your traditional bank, which charges for deposits (wtf?)
Lets say I want to $100 to a friend in Mexico:
* My bank doesn't charge me for deposits. (still $100 USD)
* Coinbase charges 1% to convert my USD to BTC (converted 8.947 BTC at 11.05usd per btc)
* Sending that to someone else costs almost nothing (8.947 BTC).
* The person receiving is not charged anything, unless they want to convert to another currency (e.g. pesos)
In this scenario, there is certainly slippage / costs, but it still beats MoneyGram, WesternUnion, Xoom, etc in terms of cost to send money from country to country.
Where are you getting these figures? I can pay 0.5% in fees or less to purchase bitcoins on MtGox. Other solutions are nowhere near 10%.