That constrained supply is actually the biggest problem, to hold the value stable supply should be actively managed.
That makes no sense for uncollateralized debt/debentures/loans/payables. No matter what a contract states if I entered into the contract under false pretenses and I do not have the means to pay for it then no blockchain backed network is gonna protect you as my counterparty. Most in North America depend on credit. That means only a tiny minority can afford to put money up in escrow, whether traditional or via smart contract. You are now mixing up concepts. The financial system in the end DID NOT fail because there was a lender of last resort, someone to bail out the system. You don't have this here with cryptos. All depend on the faith and trust of the participants, the current runs on deposits show how fast this trust can evaporate.
That is certainly a popular argument promoted by central banks that can print money. I just disagree. That solution has enabled central banks and governments to transfer a massive amounts of wealth away from savers.
The algorithm can be copied. Bitcoin can not be copied. The dollar can be copied too but people won't accept the copy. Same with Bitcoin. It's easy enough to download the software and run it with a new seed but no one will want your new copy.
If you like your assets to multiply then maybe you would be happy just holding US dollars. It's not like I'm going to talk you out of it.