I think fiat cannot be replaced with crypto and that's the reality.Right now we see that digital money is important because of the virus but time will come when it's over, everything will return to normal and we will use cash again. I agree if fiat collaborates with crypto for a better future in financial system, that's great.
I tend to agree with your position overall - crypto can't replace fiat, not now at least.
However, I am not sure that there will be distinctive moment when everything will be "normal" again.
Chances are we're building new normal now and blockchain/crypto already sort of inlaid in our economy
The transition to the use of only decentralized cryptocurrency around the world is impossible for our society. As long as there will be different states on planet Earth with different views on the world economy and politics, as long as there will be national money, national armies and everything else that is the inalienable attributes of the state.
Decentralized cryptocurrency can become a single currency on Earth only when there is a single superstate and then, after solving some important issues. Until that time, decentralized cryptocurrency will be beneficial to society if it is used alongside national money.