How can bitcoins be used for daily currency if their value changes erratically? If Bitcoin was the worldwide money system...

Suppose that you work and save your bitcoins, to purchase something big like a house or car, but the value fluctuated like crazy, as the stock market does.

Whats to say you wont be rich today, but broke tomorrow? Today you could buy your necessities but tomorrow you would be back to zero?

How can individuals in a society live like that? You would revert back to the caveman system of bartering hard goods for goods in trading because the concept of money would be too erratic.
If Bitcoin becomes the predominant worldwide money system, the volatility due to speculative FX would greatly diminish. The problem is that it is not, and will not likely be the reserve currency any time soon (if ever).

I can not think of any counter-measure within the current design of Bitcoin, except to exchange into dollars (or gold since we are in a gold bull cycle) for storing and only use Bitcoin for a short-term holding for transactions. However, many Bitcoiners ostensibly prefer to speculate on its appreciation and hold it.

Every small cap currency has this problem, because of economy-of-scale network effects they will always be measured against the reserve currency.

This is why there was a U.S.A. Treasury official who was rumored to have quipped in reaction to some smaller country's protest, “it’s our currency, but your problem”.

So the small cap currency has no choice but to try to make itself stable relative to the reserve currency, unless it just wants to be a small cap “investment” speculation. It may be impossible to maintain stability in all scenarios. For example, the Asian Crisis of late 1990s was caused by speculative capital flows, that stampeded to Europe to invest in speculative opportunities opened up by the creation of the Euro at the turn of this century.

This is precisely why I propose an alternative design for Bitcoin.