So I really want to understand how Bitcoin has lost its identity.
Bitcoin is the epitome of individual liberty. Its identity is derived from the freedom to define it yourself. It's just that it is now increasingly regarded as an asset.
It is not often very attractive means of payment, because of volatility and on-chain cost, but depending the case, it can be far more comfortable to use than other medium of exchanges. For example, sending money electronically, from one country to the other, or if you want final settlement within 10 minutes, or privacy, or [endless list].