I agree that Bitcoin might be too deflationary for its own good, but you also do not consider the 100% verifiable and transparent aspect of Bitcoin.
If I get paid in a gold bar, how do I know how much gold is in it? Because of the stamp of an institution? That's not that good.
Also the gold physicality will always lead to governments issuing fiat backed by gold as it is much simpler to handle.
If you take an extremely long term view, Bitcoin can change. So if you assume that other cryptomoneys could replace the dollar, then you have to consider Bitcoin a prime contender. Right now, it doesn't look like it will change or be upgraded significantly for a long time... but who is to say what happens in 50 years?
Maybe bitcoin will just benefit from network effects and change the rules to suit everyone.