It's transparency with the bank reserves. With a bank, you actually don't know if there is gold in their vault unless you go and verify if the gold is in the vault. A consortium of banks can also multi-sign an address, so a certain amount of key holders will have to sign off to move the bitcoin, decreasing risk. Then you can use the bank's services to have the equivalent of credit cards, fast off chain transactions and so on.

I guess a similar gold vault problem is possible with private key control, but that is the same as verifying if the bank still has the keys to their gold vault, a much smaller problem.

> This doesn't apply if many of the transactions happen "off chain" to offer the reversibility benefits you mentioned before.

Large institutions as in banks for example who do make "on chain" transactions but I agree this was not the strongest argument. It is correct that transparency goes out the window as soon as your transactions are "off chain".

> Basically, to get all of the trust benefits of the banking system, you are saying we have to essentially not actually use bitcoin, which makes me wonder what the point is.

Yes, in the same way that you are not using "federal reserve notes" when using any of those services (Paypal, credit cards, wire transfers, etc.). Yet you seem to still see the point in USD, the currency.

> At that stage, why not have gold denominated credit cards? Less technology to depend on and the government still doesn't control supply.

It was the case for a long time that fiat currencies were backed by gold. To be honest, I'd be somewhat happy with that but I believe Bitcoin has several properties that make it superior to gold (e.g. it's digital).