Fiat currencies are important for the bitcoin economy.

First of all, why is gold/silver or any other commodity valuable for people? Why is the US dollar valuable for people?

Despite of fiat currencies losing their ties to commodities like gold or silver in the 20th century, fiat currencies retained status of money because of memory of previous money prices. Gold don´t circulates as a medium of exchange, prices are set in USD, not in gold, if people want to trade in gold they do it based on their knowledge in USD/gold price ratios.

The same applies for bitcoin to serve as a medium of exchange. Like I said before, bitcoin have value today due to memory of previous money prices, based in the BTC/USD price ratios or BTC/other fiat currency price ratios.

In the beginning, the very first bitcoin exchanges established a price for bitcoin, and that wasn´t an accident, it was a very important step to make bitcoin transactions possible in the future, this way people are able to set a price for good or services.