Well in theory that could happen if people only used bitcoin or crypto for transactions, but that's likely to never happen, just as the entire world doesn't just use one currency. Also you have to remember people are likely always going to trade it for something else whether it is fiat or another crypto and even fiat currencies are traded against each other and lose or gain value over time due to numerous factors so they will likely always co-exist together.
I agree. Of course there is a possibility but I bet, it will not happen. The ability to use bitcoin is still on the hands of the government though I dont think bitcoin depends on fiat in the first place.
It's not in the hands of government. It's in the hands of the people. If people just started using it instead of fiat it would achieve dominance naturally and maybe people would stop using fiat or use it less and less and then there would be nothing that they could really do about that, unless they try ban it, but under what grounds? They can't ban gift vouchers or people from accepting foreign currency so this would be no different. This could certainly happen in the future, but I see bitcoin working alongside fiat as option rather than taking over completely.