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"What it seems blockchain is entirely unnecessary for is a financial system with all the same functions as the existing system we are already accustomed to"

Except that the existing financial system is not ideal and can be improved, while existing blockchain-based financial systems can certainly be improved with safety nets from traditional finance.

2 main issues with current model - a central currency issuing agency like a central bank can, and does, create currency at will, resulting in inflation that devalues everyone else's holdings. For the Keynsian model, a government is free to print as much money as it wants without consequence, which is clearly nonsense, since inflation devalues everyone else's income and savings. A pre-defined and unchangeable rate of currency issuing, as in the bitcoin model that limits mining, guarantees that the value of savings and investments cannot be inflated away. Some say that governments cannot work this way as it ties their hands too much. According to me this is highly desirable exactly because it limits government spending.

Second main issue is the centrality of financial intermediaries who are both custodians and gatekeepers. On the one hand, having custodians of your money is a good idea unless we want to be walking about with huge amounts of cash, either physically or digitally. It's good that we can deposit money in a bank (physical or digital) where it is convenient and safe. But the custodian should have just one role - identifying the account owner, who can then move their money at will at their own discretion and without hindrance. If the custodian is also acting as a gatekeeper beyond these basics it can be a problem. Banks and/or governments can, and do, freeze people's accounts without the knowledge/consent of account holders, even when the account holders have done nothing wrong - eg banks in Cyprus and Greece in the last crisis. For those who say 'only in emergencies / extreme cases' - that's exactly when people need access to their money.