Interesting points. I think the fundamental confusion a lot of people have is in merging the ideas of money and cash. When we say “fiat currency” it’s easy to forget that currency is just the tip of the iceberg of what money is. Most conventional money doesn’t exist as currency at all — it’s literally virtual, existing in the almost infinite web of debts and obligations that tie it back to real things like houses, factories, cans of soup, tax bills, etc. Bitcoin, even in theory, only covers the small part that is money you use for a cash purchase. That’s it. The inertia of real money is huge because those trillions of debts and payments have all different times associated with them. It’s not explosively volatile for that reason. It’s critical not to mix up the ideas of money and cash.

I don’t know how it could not end in disaster. Every dollar that walks out the door represents more than one dollar ponied up by someone buying bitcoin. That’s the only way money enters the system. As the price cannot rise forever, eventually it must reach a point where even the most credulous person will no longer think it’s a winning bet. After that, what conceivable mechanism could keep the fabulously expensive accounting process running?