No monetary system is perfect. Bitcoin too has its flaws. I have two primary issues with BTC.
1) Its value is derived purely by supply and demand in the market place. It is like a piece of art. It is only worth what someone is willing to pay for it.
That is the case with any monetary asset. That is the fundament of any speculative asset (of which a monetary asset is a specific case).
2) What's to stop a wealthy consortium or a country like China from taking control of it. And if this were to happen, since it is not backed by anything physical, would its value fall to zero?
Probably. As fiat money does. (the Reichsmark being the schoolbook example, but there are many others).
In fact, "being backed by something physical" only makes the asset a proxy of the physical thing. But physical things can also be speculative. The only thing that limits the down side value of a physical thing, is its supposed inevitable consumption value. But in as much as a physical asset has only his consumption value, it doesn't have any monetary value or use. The extra demand for monetary use is what increases a physical asset's price, and that increase is exactly its monetary value. When a physical asset falls back to its consumption value, it has lost all use as a monetary asset.
So the only difference between a "non-backed" and a "backed" asset is that BESIDES its monetary use, a backed asset is a proxy of a consumption value.
On the other hand, a backed asset has the problem of rising the price of an asset that is also a consumption good. That consumption then becomes difficult or impossible, because of the price distorsion.
All this indicates that it is much better to have non-backed monetary assets over backed monetary assets. Non-backed monetary assets cannot perturbe the consumption of something, and backed assets can just as well loose all their monetary value.
In fact you can do that yourself.
Consider "food" as a backup of a monetary asset. If that were true, that would be a disaster, because the price of food would increase much because the extra demand for food as monetary asset. Nobody would be able to eat a decent meal at a decent price !
Let us consider that the price of bread is multiplied by 50 because of its demand as a monetary asset. So instead of, say, a bread having teh value of $1 (I'm using the $ as a unit of value measurement here only), it would cost $ 50. Nobody would eat bread any more. But you can use bread as "money". As it is backed by its "food value", you know that in the worst case, your bread can only drop down to $1,-, because people will still want to consume it at that price.
Now, consider that you have an altcoin, "breadcoin". It is worth $49 because of offer and demand. If you want to "back it up" with something physical, it is sufficient that for each breadcoin you own, you also buy a genuine bread. As such, the day that the breadcoin hyperinflates, and looses all value, you still have your bread left. As when you were using physical bread.
