As bitcoin shifts further from the twilight world of hackers, beyond speculators and early adopters towards the brink of "early mainstream", its proponents are confronted with a problem: while merchant usage is on the rise, consumers are so far unconvinced. So how to go about persuading them otherwise?

To become a ubiquitous means of payment in the minds of ordinary consumers – which means being seen as a better option than either credit cards or PayPal – bitcoin must evolve into a medium of exchange, rather than just a store of value.

The bitcoin ecosystem has advanced at breakneck speed, passing through the various growing-up stages along the way: first came miners (creation), then exchanges (buy/sell), next digital wallets (storage) and vaults (more storage). That got us to store of value, and now we're moving to medium of exchange (ie payment service provision for merchants and setting-up for transactional usage).

While dollar volumes at giants like Amazon and eBay are adequately served by existing systems, a major opportunity exists to create the next compelling consumer payment method for the internet-era – which would be the first major innovation in the space since the launch of PayPal in 1999. Bitcoin is the obvious contender. However, from a user's standpoint it's still far from seamless, requiring a log-in process similar to accessing an online bank account (the alternative QR code method is little better.) That needs to change.

I believe the best way to achieve that is to build apps with seamless one-click interfaces, which make the consumer experience as straightforward as possible. This is starting to happen, with consumer services mimicking traditional banking apps, layered on top of state-of-the-art storage, being developed by the likes of Xapo. Similarly, Apple might be getting ready to embrace cryptocurrency apps, according to their WWDC statement.

Above all, bitcoin needs to become an instinctive transaction mechanism available at our fingertips. The protocol would be used as an invisible and embedded means of transaction (with merchant acceptance deemed as standard), where the consumer technology instantly acquires a bitcoin with which to settle – transforming it, in effect, into the elegant rails over which the payment glides.

Where may these use cases emerge? One of bitcoin's distinct advantages is its ability to transport cross-border payments effortlessly. If you are, say, from the UK and shopping on a US site, a card transaction will entail a foreign exchange fee, while your bank/card company will be likely to take a wider spread on the exchange rate, plus levy a one-off charge for a foreign payment.

Remittances are a derivative of cross-border payment flows, and we have been meeting entrepreneurs working on such projects. Another opportunity might lie in "social tipping" – that's bitcoin as a by-product of some beneficial activity on the internet (perhaps sharing capacity, or webpage real estate).

As with any new protocol, there are initial uncertainties. Yet over time, as the wave of entrepreneurial innovation increases, I would expect to see a network effect occur, similar to the evolution of email (or perhaps telephony). From there on, the opportunity is almost limitless. Today, bitcoin is predominantly about payments, but it's also a broader transaction mechanism, whose myriad uses we can only begin to imagine.

Jan Hammer is a partner at Index Ventures. Index Ventures are speaking at this year's Guardian Activate London Summit on 17 July, 2014

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