Ian: I really don't think the argument holds much water as far as reality is concerned. Yes- it could cost $0.83 a transaction. It doesn't mean it has to if you aren't willing to spend that. It just takes longer to confirm, but immediate confirmation isn't even necessary for most small transactions, so its a mute point.
The fact people are paying even more to speed up the confirmation process is not a necessity either. I've only ever done it twice and one was just so I could demo Bitcoin (the hard way) with a real transaction by sending Bitcoin to somebody who had installed a wallet and then who was going to try and spend it right away. The other time was when I sent myself a large amount of Bitcoin to pay a car bill. I had never raised the fee amount before to speed up a transaction, but with the $3,000 I was spending the $1-2 expedite option was trivial.
I also thing this argument overlooks the fact that having a bank account and dealing in fiat currencies have other costs too. For instance pretty much all major banks such as TD, Bank of America, and even small banks (I know I used them all) charge fees for all sorts of normal things including transfer of money. For currency deposits over a certain threshold for instance they'll often a percentage, they'll charge a monthly fee, they charge yearly fees (even to normal account holders, I pay like $25-100 / yr for a BoA credit card, and I was paying $15 / month for a BoA bank account), they charge overdraft fees (TD is particularly bad with this in my experience), they charge significant wire transfer fees (one Bank of a dozen I thoroughly investigated wire fees on a few years ago was charging $120 to do a wire transfer- that was INSANE), they charge conversion fees (8% for TD to convert between USD and Euros I believe, got hit by that once, only cause the person initiating the wire screwed up), and so on.
It's almost always an option thing when you are talking about having $200 USD worth of BTC in your smart phone- or are making an online payment. The confirmation time simply doesn't matter for the vast majority of transactions and the few where it might matter the time sensitivity just doesn't exist. If I spend $20 at Local Burger they're not going to concern themselves with whether or not you made payment. The reality is restaurants accept a certain amount of loss from unscrupulous players and this is no different from any business.
The other thing is that he's talking about third world scenarios with his $3 a day paycheck thing. While it would be ideal if we had a solution for third world scenarios like that there are significantly bigger hurdles to overcome- like basic utilities such as power and internet access. And do you think these people have smart phones with internet access? No, solid infrastructure is just not something the vast majority of the actual third word has. It never was going to be a solution for that- at least not by anybody who actually understood Bitcoin's value- not in the short term anyway. It might have potential to help poor countries- but not places where people are maybe making $1-3 USD / day at best. Where it'll help is people in places like Mexico which are not third world, but still very very poor by American / modern western standards. Instead of paying $40 plus to wire a paycheck back home it'll cost a fraction of that (ie Mexican's working in the US and sending money home, but this also applies to more than just Mexico, lots and lots of temporary and permanent immigrants do this all over the world). Bitcoins might realistically cost maybe 1/40 as much give or take specifics. It might actually be significantly more saved because they're paying a premium on wire-like money transfer services (due to issues opening bank accounts).
I think it is also important to remember that converting USD to Bitcoin has a non-zero cost that is going to be more significant too. But it does depend on the circumstances. Like is the person being paid in BTC? Or did they have to convert? Do they have a bank account where they are paying 1/2 to 1% to convert? Or are they paying 7% through a Bitcoin vending machine? The reality is 7% is still less than the 8% conversion cost I paid with a bank account to do a wire transfer where the money was converted from USD to Euros. At the end of the day I think Bitcoin has a lot of value proposition going forward even if we're not all (the poor) able to fully take advantage of that savings instantly.
I have made some transactions to convert from USD to Bitcoin to then withdraw in HKD. It was cheaper than going directly through the banks. However it also depended on using the right channels to do the conversions. If we eliminated the fiat to Bitcoin and back conversions Bitcoin comes out way ahead. It also doesn't lose value the same way fiat currencies do. It fluctuates, but long term usage should result in increases in worth not decreases. I'm temporarily poorer when I invest in something and that is what Bitcoin is sort of- even though it is a bad investment in my humble opinion. That investment can go down- but it can also go up- but every investment has some risk. People are better off storing their money in Bitcoin long term than fiat currencies despite the fluctuations in Bitcoin's value. People don't not use Canadian dollars or Australian dollars or Euros just because they have lost some value over the last few years. Bitcoin makes it easy to see the losses and gains so it frightens people. But it's not that different than having some fiat currency in your pocket. The US dollar is in a permanent downward decline and that is by design. It is intended to push people to spend and invest their money rather than hold it. Bitcoin is a bad investment and I feel people shouldn't hold it either- but that doesn't mean it isn't a better choice than say fiat currencies. It works very well as a temporary storage mechanism relative to fiat currencies to conduct day to day business. For everything else you should be investing your money in something that reasonably reliably will grow in value. Like say a business, stocks, bonds, or even a house, etc.