One of the big reasons that the US moved towards central banking and eventually paper currency is stability.
Any finite commodity is subject to rapid swings when supplies are constrained. In recent memory, copper, silver and electricity are all commodities whose price went crazy when either demand got wacky high, or supplies got very limited.
In history, the economy was traditionally very vulnerable to economic shock in the fall, because when agriculture dominated the economies small banks were starving for capital as they waited for the harvest (and payment of crop loans). Any hiccup would rapidly cascade through the system and lead to bank runs.
With the fiat system, capital is made available to smooth the bumps. Instead of a depression and widespread bank failures in 2008, the central banks flooded the markets with capital and blunted the impact of the crisis and avoided panic.
The interesting part about your post is that it is in response to OP asking if people would be willing to buy BTC at any price (to which you responded no). But you gave the perfect example of mass psychology encouraging people to hoard an asset they believe to be safe: in this case, in 2008, it was the USD. Despite 'printing' (yes, I get it, it's not literally printing) massive amounts of USD, the world ate it up because the USD it the world's reserve currency and they (correctly) assumed that if the US is in trouble, every one else's currencies were in waaaaay worse shape. Thus the insatiable demand for something that was becoming 5x less scarce.
Now, if Bitcoin ever reaches that level of belief in its capacity as a store of value (for example, based on the fact that for the first time ever you have a currency/scrip/asset/commodity whose entire supply is predetermined, fixed and immutable politically, could you not conceive that it might to have buyers flock to it? (not asking if it's probable, only if it's possible; I'd agree that at this stage this isn't the case)
That's important because it makes longer term capitalization of things like homes possible. If the world was still using gold or BTC as currency, lending would be like it was in the gold era as well -- things like 30 year mortgages that make homes affordable would not exist.
As far as crises go, 2008 was a painful market contraction, but not a panic. Contrast an event like the Panic of 1907, when banks collapsed and many people lost life savings, mostly due to a shortage of short term cash. The nation averted disaster becuase JP Morgan happened to be in town and had enough money and clout to intervene.
In 2008, the Fed pumped money into the markets to allow banks to stay solvent. FDIC made depositors at the few failed banks whole. Thanks to the corrupt perversion of the banking regulations, the "too big to fail" banks required even more extraordinary aid. People were hurt and lost money -- but they did so because their assets lost value, not because their bank went out of business.
Our monetary system isn't perfect by far. But it's much better than the old style gold standards that BTC is reminiscent of.
As an example, you want $10 for a widget. At 10AM that might be .001 Bitcoin, at 1PM that might be .0015 Bitcoin. You still get your $10. If there is a Very Bad Event, then that $10 widget might cost 7000 Bitcoin, you are still getting your $10.Or close to it.
Generally your big risk is the value of Bitcoin falling through the floor in a matter of minutes and your system (or third party provider) failing to keep up with such a change.
To answer your questions.
1. No. Bitcoin's value fluctuates pretty wildly and there's dozens of things that could cause the currency's value to implode. I think the challenges and risks for Bitcoin are different from government-backed currencies, but it is by no means immune to a crisis (has already had a few).
2. No. I'm sure some organizations and individuals would prop up Bitcoin. But there's no central authority with policy-making power acting on behalf of Bitcoin.
Generally I think Bitcoin is going to make it. There's a lot of interest in the currency from the financial sector, and a lot of money flowing into companies that deal as service providers for the currency. Basically, enough people have a vested interest in it that it is worth taking seriously. But that's just my guess at the moment.
2. no, how would this would decentrally? You could pay into an insurance policy maybe, that pays out in alternative currencies?
I don't see how this is realistic; the needs for bitcoins will be endogenous to the people using it, whereas the supply increases based on arbitrary constants (until it stops increasing altogether).
That says to me that the more people that use it, the more volatile it will become (especially after the supply freezes). When it becomes less volatile, it's merely because the needs coincidentally line up with the supply (i.e. when transaction volume drops -- fewer people 'using' it).
This eliminates BTC price fluctuation from a merchant who does not want to speculate.
Why does it imply that? You could also say that the existence of cash USD implies that someone somewhere is always willing to buy in to USD, no matter the circumstances. Obviously, this won't literally always be the case, and there are always circumstances where people won't accept USD.
1. Is BTC somehow immune to currency crises like many government-backed currencies have experienced? 2. If BTC is not immune to crises, have any parties emerged that will act to "defend" BTC in a crisis?