That's why a cryptocurrency can't be backed by gold and be decentralized. But there should be something that can backup a cryptocurrency and still allow it to be decentralized.
The problem with backing is that you need to introduce a fixed exchange rate and always need an entity from which you can redeem your assets from. This leads to two problems:
1. You’re limiting the potential of the actual asset(e.g. 1 Tether will never be worth more than 1 usd, 1 backed bitcoin would never be worth more than the backed asset itself), this becomes a problem, because there’s no reason that someone should replace all their usd with tether for example, it just never makes sense to primarily use this asset over the actual backed asset. You can’t use another assets value and discover your own at the same time. You have two give up one of the two. A Bitcoin that is a cheap copy of another asset serves no purpose, so the answer which one to pick is clear.
2. It requires trust, because you will always need to trust an entity to hold enough of the backed assets and redeem them. Even with a digital backing, we saw how well that worked for Luna. This would give up decentralization and would defeat what Bitcoin actually is, and thus make it useless.
Bitcoin is a really cleverly designed system, there’s reason why it is like it this, you can’t just change the properties without changing what made it successful in the first place.
That's really the best type of situation because then the cryptocurrency has an objective value which is whatever the value of the underlying asset is. With bitcoin since it is backup by nothing, then it has no objective value. So nothing is really stopping it from going to zero except peoples faith and trust in it.
Your backed currency can go to 0 too, that’s what you keep forgetting. Centralized systems are easy to stop by the government, they can lie about their reserves, they can refuse to redeem the backed assets, they can give out more currency than backing exists, they can run away with the money. The list goes on. Everything falls apart with this asset, if someone inside the central entity doesn’t work honestly just once in all its lifetime.
Now you have another asset that is decentralized and doesn’t have the problems i mentioned above. Is designed by computer science, cryptography, math, economics, game theory, psychology and a strong community. Has no need to have something else attached to it. Is the first currency that works trustlessly on the internet. Most successful asset of the last decade. Triggers people worldwide but can’t be stopped. That doesn’t need anyones approval, and is strong in reality and not just with words. Is an actual alternative to the current failing money system, and the only alternative there’s ever been that doesn’t require a central entity to work. Is gaining more and more people every day. Gives you full ownership over your wealth. Hardest asset to confiscate.
Which one of the two do you need to have more faith in to not go to 0? Which one of the two requires less trust of you to work? What you mentioned above is a far worse situation.
Now alternatively, consider oil. Oil has uses. it makes gasoline which runs cars. It has an objective value and people are willing to pay for it. If they lost faith in gasoline due to high prices then they can buy an electric car but that doesn't meant that gas price goes to 0. Likewise, a cryptocurrency that was backup by a decentralized asset should be able to maintain its value no matter what people thought about it whether it was too high price or not. Whether they used an alternative or not.
This point is redundant with what i mentioned above, Bitcoin is the most decentralized asset there is, so how would the other „decentralized asset“ gain its value then, and be so superior that Bitcoin needs it? There is a logical flaw here. There’s no shortcut to letting people find Bitcoins value themselves, why is this so hard to accept?
Except that bitcoin requires computers and the internet. Fiat and gold don't depend on any of that. And until people can buy everything they buy with fiat using bitcoin then "I don't think so".
Fiat and gold depend on the internet the same as almost anything else does on this planet now. We can’t except an asset that came out in 08/09 to have the same acceptability, as gold or fiat yet. But over time this will fix itself and we can see this trend already happening. The Unit of account phase comes last and isn’t relevant for the initial adoption stages. Because Fiat is a terrible store of value, and Bitcoin will be adopted as hard money first.