In my opinion, they are thinking like that because they dont have the knowledge about our modern technologies today, most of the people who are criticizing cryptocurrency are those people who are old enough that they cannot understand how to operate a simple ipad, so they literally dont have a clue about the way our system is going.
But, a currency system must work in a way that should be simple to understand for any age people. The reason you have mentioned alone not enforcing why people still sticking with paper money. Lots of other factors like basic infrastructures are big hurdle for them for pushing to stick within paper money.