> is remarkably stable - until it is not
I think we're saying mostly the same thing, just with slightly different framing.
We have one mechanism for maintaining a stable store of value (centrally managed fiat) that in practice seems to work well most of the time but periodically experiences catastrophic failures. We have another mechanism for maintaining a stable store of value (crypto markets) where catastrophic failure appears to be standard operating procedure. The first is far from ideal, for all the reasons you mention and many more, but from where I'm sitting it still seems like the lesser of two evils.
Also worth noting that central banks predate fiat currency. Back when currencies were metal-backed governments would hoard or release metal to try and control the market value. That's what Fort Knox is for. It didn't work as well as in fiat-world, because there are bounds to how much metal you can actually manage to store, but it worked well enough. It'll still work well enough when the Fed has a Strategic Bitcoin Reserve that they can manipulate the market with.
> the smart contract would likely require its own level of background on any given ID
Oh, yeah, no halfway competent vendor is going to allow themselves to get scammed like this. And the technical solutions are pretty obvious. My whole point, though, is that we're almost immediately reinventing credit requirements for market participation.
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There are a lot of people making starry eyed predictions for exciting new developments that a crypto-based economy would allow to happen, but when you dig into the details the vast majority of those things are just as feasible under a halfway decent centrally-managed ACH system. There are also a lot of people joyously awaiting the collapse of large sectors of the financial system, but again when you dig into the details most of those sectors exist to solve problems and meet needs that are still present on a blockchain.
We've been through half a dozen currency transitions over the past few centuries. From precious metal coins to private scrip backed by precious metal to government scrip backed by precious metal to government scrip backed by fiat to paper transaction logging (checks) to electronic transaction logging (ACH), and the financial sector has not only survived but embraced the infrastructure shift every time.
Don't get me wrong, I've got my fair share of complaints about the modern financial system. But for good or ill I just don't see a fiat to crypto transition having anything close the apocalyptic effects that HN, collectively, seems to expect.