At a time where I see currencies moving away from cash to digital I think the reason is partly so that governments can control the flow of their currency more particularly for laundering. They can possibly gain more taxation from a cashless currency because cash cannot be fully traced. If i sell my car for cash to another individual the government dont get any revenue from that because it is not traceable.
So in a governments aim to control our money it will leave a big opening for bitcoin and other decentralised crypto to exist along with fiat and will allow people to "trade" anonymously with each other over a completely independent infrastructure.
In my perspective, the bitcoin and fiat can coexist because they are dependable to each other. In order for you to have a digital money you need fiat to pay your transactions online and bitcoin can convert to fiat to use in business or stores that doesn't accept bitcoin. I think in the future, the both of them will still be on run because the people and its society aren't fully ready to embrace the technology advancements.