Bitcoin can work in principle, but then, so can a printed fiat currency. The bitcoin system would have to be very finely tuned to inflate at the rate of "natural" wealth destruction, just like the printed fiat currency. Obviously, measuring "natural" wealth destruction is difficult on econometric grounds, and thus becomes a political issue. This would be true whether bit coin or paper money is floating around.
Here's the thing: if an economy is to remain strong, its outputs must actually be useful. But things break down over time. The rate at which they break down takes value out of the economy, as those things are no longer useful. If the supply of money does not reflect this loss of value, then the holders of money get paid scarcity rent. They would get paid more value (in terms of today's labor) for their dollar than they put in for it. Rents are market distortions!
The problems we face are n-fold. First, the post-War economy was predicated on making "disposable" goods. The value of the outputs of the post-War economy is now zero. Second, the post-War generation is still alive, and its savings are propping up the capital markets. This is a problem, because their dollar does not match up with their contribution to society now. In other words, if a dollar is supposed to be a store of value, backed by the value of their labor, their dollars "should be" worthless. It is as if they are now counterfeiters, since their dollars are backed by now worthless labor.
The result of this situation is inflation in real terms. Their money was sequestered in the capital markets, but is now being set free in the common markets as they retire. And it is a huge chunk of change.