You don't need to hold fiats anymore.
I wouldn't go that far, at least not until everyone is receiving their paycheck in bitcoin and stuff at the grocery store is priced in bitcoin. As it stands right now, there's a very real need for fiat currency, no matter how hardcore a bitcoin supporter you are.
I agree, as long as the world is not running 50% with crypto or digital currencies having a fiat is a necessary. If you don't hold fiat anymore then you'll probably be in a conflict most of the time when buying goods or services since there are only few merchants who accepts cryptocurrency such as bitcoin. It's like you are saying that fiat will be replaced by bitcoin or any crypto, well that's impossible to be done coz there are deeper reasons why use fiat when there is a better one, and you would not like it.
As far as OP's point is concerned, bitcoin could function just fine as a currency if people chose to use it as that. Its value would have to increase significantly in order for that to happen, but it's possible. And I would also say that if people want to keep it as a store of value or own it just for trading, that's fine by me.
but the thing is bitcoin is seen as an investment, quick money made profit due to its volatility, and none of us is willing to pay bitcoin. We can't use it as daily currencies having the fact alone the instability of its price due to decentralization. It won't work as fiat for a long time.
Crypto as a whole hasn't caught on as far as becoming a popular payment method--there are tons of coins that function better than bitcoin does as money, yet not many people are using them either.
Because it is not convenient for them, they only know one thing and that is to pay paper money.