Considering BTC is priced in fiat money and fiat money begins and ends every BTC transaction, I don't really understand how it's an alternative.

Let me put it this way: has a vendor ever received bitcoins and then spent those bitcoins on a good or service that wasn't basically fiat money?  If there's no second step in the currency chain, it's pointless except as an experiment in giving exchanges money.


Ok.  


This doesn't make a whole lot of sense.  How are your bitcoins backed up?  If you lose them, they're gone.  There will never be an insurance on bitcoins because it would just be a siren call to be defrauded.


Again, this doesn't make sense.  Inflation only matters in terms of spending power, and bitcoin spending power has been incredibly inflationary since it peaked at $30.  You used to be able to buy six Dominoes medium pizzas for a single bitcoin.  Now you need 2-3 for each pizza.  


And by control you mean trusting a mysterious third party who developed this whole thing, then trusting money changers to convert your fiat money into some kind of electronic form, then trusting the exchanges to not just disappear with your money or bitcoins, then trusting that the difficulty never gets so low that a real blockchain attack could through the whole thing into disrepair, then finally trust that a vendor who accepts your bitcoins won't just vanish with them because you cannot prove that your bitcoins went to someone else (yay anonymity).


You have some very strange requirements for your currency that are not shared by many people.  Libertarians, the free market has spoken.