Yes fiat is necessary for the economic growth of a country even if we like or not. Fiat currency has it's own merits as well. Because it can be use for loans and to pay your taxes physically. Both digital and fiat currency can coexist, both has it's pros and cons and even help each others growth. bitcoin for me is another source of payment that is decentralized and free of control.
That's right what you say, because a country must need fiat currency even though there are crypto currencies, because the fiat currency is still used as a means of payment in buying goods.