The only difference is that we cannot hold bitcoins physically in our wallet and that is the reason people don't have faith in bitcoins and prefer to use fiat money as they can hold it easily and that makes them to trust fiat more over bitcoins.
I may agree with you partly, because in fact many people do not trust cryptocurrencies at all, even in bitcoin because thsy simply cannot touch, see or smell it. So they might think it has no real value: but it is not true, there are many things which are worth a lot but do not really exist physically, for example expensive skins in games.
But there are way more differences between fiat money and cryptos, you need to remember that for example bitcoin is a decentralized currency, when a US dollar is emitted by the federal reserve: so it is not decentralized.