Do you think the state comptroller could not seize your cryptocoin assets if you refuse to pay your taxes?
I'm with you, reasonable Bitcoin supporters should not want to get rid of USD. I personally think of Bitcoin like having a Paypal account, except less businesses accept it, and after dinner when we get the check none of my friends have ever said "hey do you have the bitcoin app on your phone". Maybe that will change soon.
Not by simply helping themselves to my account. They'd have to, like, talk to me first, possibly even use Due Process. That's a huge improvement.
This is only true for savers and the vast majority of Americans, likely the world, are debtors (source: http://time.com/money/4709270/americans-die-in-debt/).
That said, you're probably right that interest rates would be lower since the demand for debt would go down since Bitcoin is deflationary but then again that goes against what you stated in the first place.
Also don't forget if you want to save, to earn interest means you need to lend so at the end of the day you're going to need debtors.
And even with some sort of smart contract placing your Bitcoin on deposit (payment channels might achieve this. Committing your Bitcoin to a channel and charging market rate fees), there's no fractional reserve banking so at least credit/money supply swings won't be so drastic and we can avoid the volatility in the business cycle we experience with fiat currencies.
It's a good job that the computer you store your bitcoin on never has any security issues.
USD is inflationary. Ceteris paribus, a rational actor would generally prefer to hold something deflationary. The (epsilon-) no-arbitrage argument suggests that the frequently raised “but then no one will ever invest in things” objection doesn’t actually make any sense.
USD is highly controlled (but not by you). This is a technical and legal issue, not a fundamental problem with fiat currencies in general, but it’s impossible to ignore. Bitcoin sidesteps it entirely. What actually drove me to try Bitcoin is when a paperwork error by the state comptroller led to them withdrawing several thousand dollars from my bank account with no warning. I eventually got it back when they realized they made a mistake, but Wells Fargo still charged me “legal fees” and the realization that I really didn’t have control over my money was uncomfortable. With bitcoin I can use my money however I want, whenever I want, and no one else can. No paperwork, no ACH/fed clearing, no delays, no surprise fees, no one stealing money out of my account with impunity. That’s only the tip of the iceberg for how much the legacy financial system sucks, and most of it can’t be fixed with a software upgrade.
Fiat could theoretically work as well as bitcoin in terms of convenience and reliability, but it never does in practice and there’s no way to avoid governments instituting worse policies later on.
I also don’t think most Bitcoin supporters want the government to get rid of USD. It’s about adding choice, not forcing everyone to do something different.