Fiat currencies definitely aren't necessary, there is an increasing trend towards digitization of currency, and blockchain based currencies are just the next generation of this. The problem is that Bitcoin came out, and everybody treated it as the successor to fiat currency, rather than an incremental improvement on digital currencies such as Paypal and Skrill. I think that if Bitcoin was never invented, but somebody like Paypal had implemented a blockchain technology first, then we wouldn't be in the rivalry scenario that we're in now.
Well in contradiction to what you have said, fiat for me is necessary given that Bitcoin will not be implemented without coming up with the idea of better trnasaction which we can say as the main not totally problem in fiat, but it just that it takes time to undergone certain progression when it come to payment, so whether you like it or not it affects cryptocurrency which make it necessary.