If everyone has their own currency then it will be very bad with the economy of a country even very bad for the world economy because people are shopping or doing transactions with their own currency so that currency is no longer valuable because there are too many currencies circulating in a country.
It may happen. For now, Bitcoin remains the most popular non-centralized virtual currency, but there is no guarantee that its position will remain that way. There's already another set of coins inspired by Bitcoin. It may be assumed that significant development will be required by the new currency to take over Bitcoin in terms of market-building ability; although this remains unpredictable. Bitcoin may also be able to adopt the development of rival currencies, as long as it does not change the underlying basis of the protocol.