Bitcoin banks would not have the same pitfalls. For one, the biggest pitfall of banks as they stand today is not the banks themselves but rather the banking system. The money printing Fed. For most people banks work just fine. That is until they don't. The real question is, why would someone trust a bad Bitcoin bank when there is open competition between banks. I imagine we will see many more FTX like situations in the future until people learn. I think you'd see competition create stronger banks. A bitcoin bank in the future could offer collaborative custody as several companies like Unchained Capital.

The bigger problem is the state and its control over money. We can argue about who is running who but the banks and the state have monopolies across the globe. The bitcoin network is one of the first real threats to this domination. The masses will go for what works and what is easy. I don't think the average person is going to have a hardware wallet but who knows. People like us are terrible at predicting the future and we do many things today that our ancestors could not have imagined.

I've been thinking about the day when Bank of America buys out a bunch of these bitcoin companies. When and if that happens we know we have won. The other alternative which I would rather see is BoA going out of business.