Cash, when compared to bitcoins is:1. anonymous 2. non-traceable3. not easily insured against theft/fire/loss 4. savings in cash are not guaranteed by law
I was comparing digital cash (i.e. money held at a bank as figures in their computers), with Bitcoin - digital cash has none of the problems you note above. Are you seriously trying to compare paper cash with Bitcoin, if so why? The real comparison is between digital currency and BTC, as those are the equivalents, and Bitcoin is competing with digital cash, not paper cash. Unfortunately Bitcoin has thrown out the advantages of digital cash in a misguided (IMHO) attempt to emulate paper cash, and ended up with many of the same problems as paper cash, as opposed to cash in bank accounts which is easily traceable, not anonymous, protected by law, etc, etc.
Transactions are only traceable if the *other* person chooses to let them be, and chooses not to lie, that's not an acceptable level of security for me when dealing with any significant sums. Simply refusing to deal with anonymous buyers/sellers would work in some sort of crypto-anarchists paradise, in the real world I don't want to use a currency which even allows anonymous transactions - it'll end up with the same abuse and problems as say email, which relies on trusting the sender.
Re adoption of the currency, I made the separate point that it is not mandated by law as legal tender - this is an important point and is not the same as simply not having wide adoption.
The fact that you can identify several companies who were hit with fraud isn't a condemnation of the currency, but a problem with a nacent industry. The same arguement can be made for storing ANYTHING of worth with a third party.
I agree to some extent on this point - this isn't a damning criticism on its own, it does mean I wouldn't trust any of the BTC exchanges though, and leads me to distrust the entire industry which has grown up around BTC, which is mostly populated by amateurs and kooks. I remember the bitcoinia post on Hacker News, announcing his intention to set up an exchange on a cheap VM, and several people warning him he would be hacked without serious controls - amateurs setting up financial systems has very much the same consequences as non-cryptographers attempting cryptography.