As much as I agree with the first part of your post about a governmentally controlled crypto being just another form of fiat (since this is what I have been saying here for years myself), I as much disagree with the second part of it where you claim that the economy doesn't need fiat. It was the case a few centuries ago when, as you correctly noted, commodity-based currencies had been used universally. Actually, they were based on precious metals (mostly silver if we are talking about Europe), but this is irrelevant to the point in question. In the simplest of terms, economies didn't switch to fiat currencies just for kicks. In fact, it was inevitable, kind of objective necessity if you please. Hard currencies were an insurmountable obstacle to a steady economic growth, so no surprise that such currencies were completely abandoned eventually.
In other words, the modern global economy, given its complexity and the level of interdependency between its parts, simply cannot function on hard currencies as they will wreak havoc in financial settlements throughout the world if we assume for a moment they get introduced again.
Let's set things straight. It had already been tried and didn't work (with gold as money). Any deflationary currency (gold, bitcoin, whatever) would be massively taxing real economy. People who have a lot of tokens representing money would be profiting from just holding them, that is by doing nothing, from people who actually create goods and services, bringing value to the table. Fiat is not perfect but what it is perfect at is taking from idlers a competitive advantage which they otherwise would have just because they happen to be rich.
There is nothing wrong with using a deflationary currency such as gold. The reason why governments moved away from gold is not because it wasn't working. There were 2 issues. Because they needed to buy it on the open market, they could not maintain adequate reserves for what they wanted to spend on, and they had to pay debts with the value that was borrowed. By moving to fiat currencies, they could tax the populace by printing more currency, hence more for whatever spending they wanted to do, and secondly, they could inflate away the value of debts.
Inflation or deflation is only bad if it is unpredictable. Any argument made against deflation can be made against inflation. Why would one borrow money if they would have to pay back more in the future (argument against deflation). Why would one lend money when they are going to get back less in the future (argument against inflation). Why would one buy goods and services when they know they can get it cheaper in the future? If prices are going down because the value of the currency is going up, then one is still transferring the same value to the seller at a lower price. Why would a seller sell a good or service now, when they can sell it in the future for more dollars?
But besides that, crypto does not have to be deflationary. Ether is inflationary.
When I referred to crypto being deflationary, I didn't mean its supply being deflationary or otherwise. Strictly speaking, Bitcoin is also inflationary, at least if we discard the high probability that right now the total number of coins available for trade and commerce is diminishing due to "wear and tear" (coins being lost, stuck as dust, burned alive, etc). I use the term deflationary in a broader sense of not being able or sufficient to satisfy the needs of a growing economy. Whoever tries to challenge this point (that there should be enough monetary supply to support such growth at all times) is either clueless (ok, let's call them poorly informed to not overstep the bounds of propriety) or has something else in mind (read has an agenda).
And no, deflation is not inflation with a minus sign attached to it, though I understand why people think it is. In fact, this topic has been beaten to death already but it still comes up pretty regularly. You bring up the same age-old arguments that have been refuted numerous times even on this forum. A hint, producers profits are non-linearly dependent on inflation (deflation) rates, so deflation is directly destructive to an economy and that has nothing to do with its predictability or lack thereof.
I think you are the one that needs to review your economics. I hope this doesn't come off negatively.
There are only 2 contexts in which inflation/deflation are used - in the traditional economic sense, and to refer to an increasing or decreasing supply of the currency (which is a new use since crypto came into the mainstream). Bitcoin is deflationary in both of these completely different definitions. When you say that "strictly speaking", bitcoin is inflationary, I can only assume that you mean that the supply is currently increasing? That would be correct, but I was looking at long-term outcomes and whether it is economically viable.
To use deflation to mean anything else is just wrong. You say "deflationary in a broader sense of not being able or sufficient to satisfy the needs of a growing economy". That is a very common misconception in economics. "That there should be enough monetary supply to support such growth at all times" is flat out wrong. Economic growth is based on productivity and is not held back by monetary supply. This specific argument you make was analyzed in great detail and refuted in Rothbard's book
The Mystery of Banking. I'm sure you will find the refutation in many other books/places as well.
Producers profits are not dependent on inflation rates. I'd like to know what your source on that is. And any references on this forum I'd be happy to look at. Inflation/deflation are monetary phenomenon. Have you studied Nobel Prize winner Milton Friedman's books/discussions on monetary policy and inflation?
There is a common notion that deflation is directly bad for the economy because in the inflationary milieu created by the Fed, deflation has only occurred in depressions. That is due to idiosyncracies of the current system, not inherent negative features of deflation.
Even look at books by Charles Wheelan. He goes over why the problem is not inflation/deflation, but unexpected deflation/inflation.