In a world where there was no need to use fiat or deal with a centralised entity Bitcoin would do exactly what it was intended to do. And indeed it does. It's the hangover from ye olde system that's introducing all of the problems people moan about.

It was never going to magically create its own economy. It has to transition from the old one and that's still a possible outcome.

As for OP's original question, if one day we woke up and Bitcoin had converted into another Monero authorities everywhere would start pumping out kittens. It would be straight back into the shadows in most places.