Volatility is a result of lack of actual usage of the currency. And yes, bitcoin has virtually no actual usage, save for speculation/investing. Any normal currency has hundreds of millions of contracts attached to it (starting from short term offers on groceries in your local shop). Each of those contracts is a volatility dampener. Saying that Bitcoin is not used because it's volatile it's like saying that x=y because x=y.
Actually that is not true. Gold by weight as a currency has been used at times, but many other forms of currency were used historically even by people who had gold available to them. There is a lot of historical precedent for credit money (i.e. people using debts owed to them as currency) and for coins minted with non-gold metals like iron and bronze. The earliest known currencies were "virtual," taking the form of clay tokens that were used for accounting in the ancient near east -- a civilization that was well aware of gold but considered it to be more useful for producing ceremonial objects. Shortly after inventing paper the Chinese started using paper money.
Gold is actually a terrible currency that makes trade much less efficient. Historically gold was most useful as a currency when empires were able to procure a growing supply of the metal, and when the gold stopped coming in people would switch to some other currency (typically some form of credit money).
Why do you think the second paragraph is true?
Gold has been disconnected from currencies only since 1971, and this detachment clearly has had significant impact: https://wtfhappenedin1971.com/
https://en.wikipedia.org/wiki/Demand_Note#Suspension_of_spec...
https://en.wikipedia.org/wiki/History_of_the_United_States_d...
Historically the pattern has generally been for a metal standard to be introduced only to be abandoned when the state is unable to procure more of the metal. The Romans abandoned their silver standard and started debasing their coins shortly after the empire reached its greatest extent, almost certainly because they could not find enough silver to keep the system going (though nobody bothered to write this detail down). In ancient China various dynasties are known to have started issuing iron and bronze coins when they could not find enough gold/silver/copper to meet their monetary needs (and when the weight of coins became impractical they issued paper money).
There is no question that using weights of gold as a currency makes trade less efficient. Most merchants and most consumers do not have the equipment or expertise needed to evaluate whether or not a given weight is pure gold, and having to pay someone to evaluate a sample amounts to a tax on every transaction. The inability for a central bank to adjust the supply of money in response to changing economic conditions actually led to greater price instability when the gold standard was in place (deflation during a banking crisis). It is economically inefficient to pay people to guard vaults filled with gold bars that are never going to do anything but collect dust. Leaving the gold standard was the right thing to do every time it happened, and going back to it was in every case the wrong thing to do (motivated more by alchemy and tradition than by any serious economic considerations).
Also this: https://wtfhappenedin1971.com/
Layer 2 is not necessary until Layer 1 has some kind of stability. Layer 2 can also malfunction during volatility. Ethereum has demonstrated this.