2. One would think they came up with a new currency system so theft could be prevented. No, BC gets stolen all the time.
Why couldn't they "disable" the serial numbers of the currency that was stolen? Thats the kind of system that should have been designed.
Ultimately I think this may prevent Bitcoin from being widely adopted. That doesn't mean it can't continue to exist as a niche system. But, the average person is willing to pay a certain amount, to a credit card for example, in order to be able to have customer support (i.e., insurance) in the event of theft.
What makes you think that "the average person" (whoever that is) is willing to pay extra? I see constant examples (even here) where people have no idea how expensive credit cards are and how every customers pays more for every item in a store that is accepting credit card payments. On top of that people are constantly in pursuit of "free" services where the only price you pay is that the provider spies on you can sells the information to advertising companies. While its a perfectly fine way to finance something, I dont think most people using a service like google are aware of the price they pay.
With all that being said I think bitcoin is actually capable of enabling a service to provide transparent insurance of your coins (for an extra ofc). E.g. some of the treasurers for the board secure a part of its funds for a fee.
What makes me think that is that they do pay extra. In addition they can purchase on credit. Bitcoin USD volume hasn't increased. Have you ever seen someone notice incorrect charges on a credit card, panic, call up the CC and then get the charges reversed? Now imagine some "average person" getting hacked, and then realizing there's nobody to call, that's it, bye bye money. And, considering even fairly advanced users get hacked, good luck protecting everyone. And, no, I don't think most people will value "free" if they have to stick everything in a paper wallet they generate offline on a dedicated computer etc etc, in order to be 100% sure it's safe. As for extra insurance on bitcoin, that's possible, but once instituted on a large scale you probably wouldn't save much over what you get now.
Having said all that, I'm not saying bitcoin isn't useful, or even that a lot of people won't keep a small amount in a cryptocurrency. I just don't think your average person in an industrialized country will trust putting the same amount in bitcoin that they do in credit cards. I could be wrong but it hasn't happened yet so I don't see why the onus would be on my argument.