When central bank/governments lose control or get greedy you end up with hyperinflation. Should I go into examples of how hyperinflation has been catastrophic?
> we don't actually know what the limit is because wallets have gotten lost and will continue to be lost.
We know the limit but we don't know how much is being circulated. Central bank money is the opposite, you know roughly how much is being circulated (if you're government is nice to you) and there is no limit.
> The impact of derivatives to effectively increase the supply
Derivates don't increase the money supply itself, they play tricks using the underlying asset. If you hold the Bitcoin asset yourself, someone playing with derivatives means very little to you. Though if you have your balance on an exchange, that's on you.
On the other hand, in the current system, you have no access to the underlying asset. You don't own 0.00001% of the central bank. In other words, everything you are using _is_ a derivative. Even something as simple as keeping your money in the bank means you are using a derivative. That being the option of the bank to hold no reserves for the money you deposited.