It will happen when the government try to adopt the digital currency like Bitcoin. But as of now as far as regulation is concerned, it can be done right now. Maybe in the future, digital currency or money will be legalize in the world but paper money will still exist. Also considering that the price of every cryptocurrency is unstable, it will be likely a disadvantage to be a replacement of paper money.
We are talking about paper money here which we already know how things are gradually becoming with the advancement in technology even without the use of blockchain. It is either you are using your ATM to do transactions, or you are practically using the internet or mobile app to transfer funds and pay some fees, so, with the way things are already, I believe it is just a matter of time, before we finally start seeing paper money going into extinction in some places as it spreads to lower regions.