True, but Franklin Mint collector plates are not supremely divisible, easily transferable, or free to store.

Alternatively, if you don't like that, then I could invent Bitcoin Prime. It's exactly like Bitcoins, except... well, it's called Bitcoin Prime. Every string of bits that is a bitcoin is also a Bitcoin Prime... except that regardless of who "owns" that bitcoin, I own the Bitcoin Prime. Who wants to buy some?

Go ahead and try, nobody will get on your bandwagon because the market will expect that a fragmented market for crypto-currency is in nobody's interests.

Oh, and if such a thing ever does become popular, I guarantee that despotic governments, nanny states and corrupt bankers will find a way to get in on the action.

Short of large scale quantum computing (which is my largest semi-fear), bitcoins mathematically cannot be controlled. Your statement is the equivalent of "if ssh tunneling every truly took hold you can guarantee that despotic governments will will find a way to listen in on them." While some governments may try to take measures stop traffic that looks as if it could be bitcoin, they cannot stop the wallet-on-a-usb-stick and in practice they would have an extraordinarily hard time doing so anyways.

There is a real market need for non-reversible, hidden transactions, driven mostly by the Governments that erect inane laws in the first place. Also, governments move slowly, they won't turn their focus onto bit coins until the first kidnapping and ransom is facilitated via bitcoins (a very real possibility).