That's because paper currency are believed to have value and are also legitimate by the government, so paper currency can be used to buy all your needs. Not because of the paper, but because of the approval from the government and also a belief that it has value.
The world is moving to a digital era and making micro transactions are possible at this stage without much transaction charges. The belief that the goverment has set a valuation for the currency can change anytime if they want to, they can demonotize the valuation any time and that happens when you bestow power to any central authority. Moving forward hope we will move in the right direction of decentralization and no single authority dictates the economy.