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TL;DR
Money has three functions and cryptocurrencies fail as all three:
Let's look at them in turn.
As investments, cryptocurrencies have every hallmark of a bubble that will end badly, and they have no real history or stability as investable assets.
Do sensible units matter in a digital-payments-first world? There is no reason you couldn't divide up bitcoins into any number of arbitrary units with their own names. Similar to what we do with dollars. Your argument on this point is pretty flimsy.
Bitcoin itself is not well suited for small transactions. Unless something like the Lightning Network proves to work well at scale on bitcoin, enabling fast & small payments, this is not bitcoin's primary purpose. As it is today it's more a store of value than a means of of exchange. But bitcoin is far from the only cryptocurrency. Others do better here, and iteration is happening very quickly.
Most cryptocurrencies are very volatile currently, including bitcoin. Gold also has significant (though lower in recent history) volatility but that has not stopped it's use as a store of value. There is nothing inherent in a cryptocurrency that means it has to be volatile, nor that says a cryptocurrency/asset that is volatile today will stay similarly volatile.
Conclusion: You seem to be answering these questions as though bitcoin is the only cryptocurrency and as though the state of cryptocurrencies today is the state they will stay in for the foreseeable future. In my view each of these is a major error.
Money has three functions and the US Dollar fails all three:
Unit of account. The lack of sensible units is highly problematic. Is the same stack of lumber for a two year project going to cost me a million or two million dollars? Or four million? How do I account for all of this inflation when the Fed makes up the rules as they go? Why do I have to be at the whim of an unelected body of people to the inflation rate of my currency?
Means of exchange - "so sorry, this is now a card only business because of the corona epidemic :)" Meanwhile, i can just pull out my crypto wallet linked Visa card and use it at any supermarket, any street vendor.
Store of value - something something fed something something look at M1 money stock.
As investments, the US Dollar has every hallmark of a bubble that will end badly, and its history and stability as an investible asset through bonds is waning quickly.
TL;DR -- Monetary value is arbitrarily assigned to anything that humans find useful or appealing. Therefore, cryptocurrencies are just as valid as any shiny earth metal that makes us go "OOH, PRETTY! GIMME!" If it's valuable to enough people, then it's economically viable.
I'm not an economist, accountant, or anything even remotely specialized in understanding the nuances and inner workings of money. But I do understand money on a very basic level, and at its most basic, money is an arbitrary value assigned to a random shiny thing we happen to like. Whether that be gold, seashells, or imaginary currency that we make up out of thin air. If we value it, even in the slightest, it has a monetary value to someone.
Take gold for instance. It only counts as money because a vast majority of people in the past decided that they really liked this shiny yellow metal so much, that it was worth trading for food, goods, and services. People killed and went to war over gold, which is nothing more than a byproduct of geological happenstance. Is that what makes gold more of a currency than bitcoin? Do we need to start killing and stealing over it for it to count? Hell, I don't even like gold all that much. I prefer silver. Does that mean that gold has no value? Hardly.
Just because cryptocurrencies have no value to some, doesn't mean it has no value at all. If a human assigns value to something inanimate and arbitrary, it's viable as a currency. I play a game called Animal Crossing where the in-game currency is called Bells, but nobody wants Bells anymore -- they want items called "Nook Miles Tickets" so they can go search for their favorite villager to add to their island. NMT have become the new Animal Crossing currency, despite it not being the game developer's intentions. It's a currency now because people find it useful. They find value in it. And some people even pay real money for NMT!
Anyway, my point stands: If silly green paper and shiny metal coins are really worth trading for essentials such as food and shelter, then cryptocurrencies are no different. They're arbitrary, they're valued, and they're in demand. And for that reason, they can't be denied as money or things to be invested in.
Fyi, I hoard all NMTs I get in Animal Crossing to sell for Bells or trade for items I really want. NMTs have no value to me because I don't go island-hopping to search for villagers. But I invest in NMTs because other people find them valuable, and baby, I take advantage of that. My island is decked out. A wise investment indeed.
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