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No, it just didn't get traction for actual transactions fast enough and it just became a target for speculation. That's a positive feedback loop where volatility discourages use as a currency while encouraging speculation.
I think what we need is to establish an independent digital currency first, and then decentralize it. For example, GNU Taler, and then build out the infrastructure and a cryptocurrency could then be phased in. Once the mass market uses digital payments outside the banking network regularly, they'll be ready to adopt something like BitCoin for international use.