You actually did not give strong reasons why cryptocurrency can't replace fiat currency. Cryptocurrency can actually/theoretically do most things fiat currencies can do, but I doubt typical fiat currencies can safely do most things cryptocurrency can do with losing their centralization. Besides, government can run their fiats on Blockchain or other real decentralized system.
Crypto could actually work better in rural areas than fiat, even without relying too much on internet. But I believe safe/crypto-friendly worldwide rural internet coverage is a possibility in the future
Can I use crypto offline? LOL. Crypto cannot replace fiat, like it or hate it but that's a fact. We can't use any crypto for micro-transactions because the fee alone will take the value of the product that you are going to buy. Not all people have access to internet and not all people have smartphones and computer, and just saying that two aspect, not all people can use cryptocurrency. We cannot replace fiat with cryptocurrency simply not all of people are afford to have the requirements to use it. And besides, when all of us use cryptocurrency the government and soon the country economy will collapse because there's no way to tax people if they are using crypto and not fiat.