In the future, fiat is not necessary. However, this future needs a very long time. The replacement of fiat has to be united among nations, which is really hard because the economy between the nations is so great. "Bitcoin replaces fiat", we say it is easy but when we do it is really hard.
It is not as hard as much you stated but it is wholly depending on governments if they unite to replace it then there is nothing which can stop this replacement of fiat into crypto. But yes, you stated very well according to the current conditions as we know that many countries are against the crypto coins which are illegal for them and this will take a long time to unite nations or governments on this replacement.