Yes I agree the acceptance of the USD is more popular than the bitcoin and people still love the physical existence of the currency in form of a metal coin or a paper note instead of the digital currency which they cannot carry like a USD in the pockets. Therefore the USD is preferred.
Physical money will always have a place in the world economy, but everything is becoming more and more digital. I personally almost never pay with physical money anymore, as I just use my smartphone or bank card to complete purchases. It's a trend that is only getting stronger among the younger generation. At some point the majority of the people in modern economies will ditch physical money as it will become more and more obsolete -- it's just a matter of time.
USD can become purely digital extremely easily. Most transactions nowadays are conducted directly through card transactions which do not involve physical cash. Bitcoin would need to be more competitive than just being a digital currency to compete with the already dominant USD.