Fiat money is great as a medium of exchange in your local jurisdiction. Start moving across borders and you have problems. Save long-term in your bank account, and inflation will eat its value away. Have political or religious views that run counter to an oppressive regime, and you will find your accounts seized or frozen. Live through a war or serious economic downturn, and you may find that all your previous cash and savings are completely worthless.
Bitcoin doesn't have take-backs if you mess up: a bit of lax security and a hacker can get all your money. Insufficient backup solution also loses all your coins. Using on-chain transactions for daily point-of-sale purchases is slow due to the block times. Speculative pressures drive wild swings in prices due to illiquid markets for crypto.
There are plenty of reasons to avoid each type of currency, and each has its own advantages.
You have similar problems with bitcoin except they manifest themselves in a different part of the process, namely when you have to convert the transferred funds into local currency in order to use it for goods and service. Trying to coordinate in-person meet ups to exchange bitcoin for spendable money is inconvenient, unsafe and comes with a high markup, it's also a non-starter if you have to transfer the funds to a region with limited electricity/internet access or you're dealing with a non-technical recipient.
> Save long-term in your bank account, and inflation will eat its value away.
Bitcoin does not solve this "problem". The logic behind inflationary economic incentives aside, there is no guarantee that bitcoin's price will continue to rise, it could easily crash to half price tomorrow and recent history shows us that nobody really knows what events cause the price to swing wildly.
> Have political or religious views that run counter to an oppressive regime
As I said, not being operated by a central authority is one of the only benefits of bitcoin, however, in the case of an oppressive regime, bitcoin's usefulness begins to approach 0 since the oppressive regime could eliminate your ability to access the internet or they could just imprison or kill you.
Not just that, but most importantly in term of scalability.
At the moment we have less than 5,000 transactions per 10 minutes, which are less than 100 per second. Compared to what old-fashioned fiat banks handle, this is a joke.
Bitcoin does have its place in the world, but not as a full substitute of fiat currencies.
-It is lighter--I can carry it in my head
-It travels faster
-It is not inflated by 2% a year
-It cannot be forged
-It can cross borders
You cannot carry those big numbers in your head comfortably. Heck, it is tricky to carry a wallet ID. Even trickier to get a physical transaction done with BTC.
I think it may be that bitcoin makes a better gold than cash, but it remains to be seen. Volatility is trending down, long-term.
The programmability aspect is cool and novel but mostly useless in practice, .e.g smart contracts and similar tech have yielded close to zero in terms of useful applications. Besides internet gambling I cannot think of a single useful application for smart contracts even in theory, in practice they are non-existent.
Moreover, the applications developed as a result of token funding can generate economic activity and increase efficiency. And it's not out of the question that traditional companies will issue security-tokens that provide a legal claim (or perhaps a claim that while not contractually guaranteed, is guaranteed by collateral put up by the firm, and which is held by a larger trusted third party that acts as an adjucator) on the company's underlying assets and revenues, especially in countries that are not well connected to the international financial system and thus have difficulty receiving payments from foreign investors. Token securities could also be an opportunity for smaller companies that have difficulty meeting the regulatory requirements for issuing traditional securities and which operate in countries where issuing such tokens is not illegal.
In any case, this particular contention is somewhat beside the central point I was trying to make, which is that the programmatic and geography/identity-transcending nature of cryptocurrency gives it abilities that traditional currencies don't have, and will obviously find use-cases in an enormous number of applications overtime.
National currencies are better for buying a cup of coffee and paying your taxes.
But over the last 9 years, Bitcoin has proven to be a far superior store of value.
Maybe Bitcoin's role will be as a reserve currency, the "gold standard" of both national currencies and cryptocurrencies.
Bitcoin is slow, stable, secure and reliable. So save in Bitcoin. Move large quantities across borders in Bitcoin.
But do routine transactions in whatever is most convenient for each transaction.
Ubiquitous usage by "the masses" to buy coffee isn't what makes Bitcoin valuable, since that's not its role.
And despite its 500% price appreciation this year, Bitcoin's volatility is much lower now than in years past.
Here's a chart of volatility since 2010: http://imgur.com/a/CY1j6
If what you want is something which holds its value from day to day and is secure against normal levels of inflation, bonds and interest-paying savings accounts have been around for a very long time
We can't trust fiat currencies but we didn't have any other choice for a very long time so we got used to them. There is no way for you to carry hundreds of notes and coins on you and feel secure let alone convenient.
As for ease of use, I remember when the Euro was introduced many people were super confused with the new currency.