Did I get any of the facts wrong? Is my reasoning flawed?
I think your reasoning was very solid.
But i'd probably shoot straight at the core of monetary utility.
Gold has zero internet utility (even with the best compression methods it cannot be transfered over IP). While "cryptography+communication" does, so much that without it we couldn't have the kind of internet we have, and that's what gives bitcoin a physical backing.
Which seems to have been his final argument (which btw is invalid, something becomes money once 1 or more people accept it as valuable):
That is, even if it does have value as a consumer good to some people, it's not enough people for it become money.