It’s not a trivial matter to create and maintain a currency. A successful attempt requires wide acceptance and a high stability of value. People will not willingly accept as a currency something that varies widely in value from one day to the next.
Sure, speculators will, but businesses and individuals generally will not. If one earns, via his labors, the equivalent of one mortgage payment per week, he’s not going to accept being paid in a currency that might suddenly only pay 2/3rds of a mortgage payment that week due to a drop in the value of the currency.
Gold and silver have served as currencies, but only in societies where no central bank has been established. Once a central bank establishes a currency successfully, that currency drives out gold and silver as transaction mediums simply because they are too volatile.
That said, very few governments are capable of running monetary operations so as to maintain a stable value of the currency over decades. And when some fail to do so, they fail spectacularly. The dollar is an accepted worldwide currency because it has generally maintained stability albeit with a persistent tendency toward inflation year after year. That inflation is consistent enough that people generally accept it, and just expect relatively small inflation adjustments to their salaries, and to their purchases, year after year.
Bitcoin has no hope of supplanting a government-issued currency, for it will always trade up and down with significant volatility, more even than gold and silver now do.
That said, I fear the current Federal Reserve Chairman has created a situation that could easily result in a spectacular failure of the dollar sometime in the next few years. However, he has operated well outside the normal boundaries of typical Fed operating procedures.
Later, have to walk the dog. ;)
First:
Once a central bank establishes a currency successfully, that currency drives out gold and silver as transaction mediums simply because they are too volatile.
Not exactly, bad money drives out good. Read more about Gresham's law here: https://en.wikipedia.org/wiki/Gresham%27s_law
Second:
Sure, speculators will, but businesses and individuals generally will not.
On the contrary, many people (including yours truly) respect the virtue of diversification. It's why I believe everyone should hold at least some wealth alternatives to the dollar or other fiat, Btc being a possible part of such a portfolio.
Third:
The dollar is an accepted worldwide currency because it has generally maintained stability albeit with a persistent tendency toward inflation year after year.
That good name is being eroded daily. Other countries are already looking for an alternative. And unfortunately, we may see a collapse of many fiat currencies worldwide in the near future, then massive inflation as a result.
Fourth:
Bitcoin has no hope of supplanting a government-issued currency...
You're missing the point. Bitcoin (crytocurrency) as a medium of exchange, MAY eliminate the need for government-issued currency - as breathtaking or impossible as that may sound for now.