[nicholas73]

Another point is to look at the position of sovereign wealth, large banks, and investment funds. If you held a trillion dollars, would you park it in a currency that is backed by a state, or trust that kind of money with mere agreement? Would you put most of your net worth in bitcoin?

Now let's allow that bitcoin has become universally accepted and is indexed to some basket of goods. Then it should be reliable as a currency, right? Well, yes, it'll be an international currency ... just like the Euro! And what we saw in the last few years is that the Euro system is inherently unstable because of unbalanced trade and uncontrolled government debt. You have the PIIGS countries facing the choice of massive debt service or withdrawing from the currency altogether. You have the wealthier countries being forced to support the deadbeats from their own tax base.

In the end, currency is what people make it out to be, and people will game the system. Whatever system bitcoin settled upon will have its own problems. At least with a state backed system you have players who have self interest in mind.