The merchants have their prices fixed in USD, when I pay Coinbase tells me how much Bitcoins I should send to transfer the equivalent of say $10 and then they d

The merchants have their prices fixed in USD, when I pay Coinbase tells me how much Bitcoins I should send to transfer the equivalent of say $10 and then they directly convert it to the merchant's preferred currency and deposit it at their bank account. This insulates the merchants from the price swings completely, which is cool for now, but I don't think will be needed later. I'm aware of option 1), but I'm focusing on option 2), which is possible even if people don't stop speculating - the national currencies are pretty stable even though the exchange rates are only based on speculation. I believe this is just a question of volume and widespread adoption, which is happening for XBT with the recent large investments in many Bitcoin start-ups, so there's hope :)