Fiat will be replaced by crypto currency but i dont think it will be bitcoin. Government want to control everything and even fiat money , bitcoin cant control by the governement so they will create thier own and will use blockchain technology to make a new way of payment before fiat currency fall.
Yes, this is quite a possibility. We see right now that some governments are already planning to launch their own versions of a cryptocurrency although there are now some precedents like the failing Petro of Venezuela, yet we have not seen a big country taking cryptocurrency with full force, maybe what China is cooking can be the litmus test on the probability and viability of a state-sponsored and run cryptocurrency. Once China can be successful with its cryptocurrency we might be seeing other big governments like Russia, EU and even the USA taking notice. However, I also don't think that Bitcoin will die because of this as the opposite can even be happening.