of course fiat is necessary. because fiat is more or less safer currency comparing with other alternative currencies such as crypto currencies. they are mostly backed by governments and also easy way to make payments.
Fiat currency will always be needed, because the bitcoin currency cannot meet every need of the people around the world, the bitcoin currency clearly requires technology that is always related to the internet network, while not all regions in the world have internet networks, become fiat currencies or paper will always be needed, especially in remote areas, and in traditional markets, maybe in the future fiat currencies can complement each other with alternative currencies of bitcoin.