Bitcoin in paper form is not good for trading, since the creator/holder have access to its private key, the possibility of fraud and scam is likely to happen. Imagine you received a physical Bitcoin with an amount of 0.01 BTC as payment for your goods, then right after receiving the amount, the bad actors sweep the Bitcoin to that address. The merchant then is left with just a physical form but the amount on the paper Bitcoin is removed by the scammer and put it on another paper Bitcoin and do the same thing over and over again.
This is one scam scenario that may happen if we do the thing you stated. So Bitcoin in physical form is susceptible to fraud and scams.
if bitcon becomes a physical or as a paper money then the aspect of private key and seed phrase will be removed. There will no seed phase again. Because the seed phrase can only be use on internet and to login whenever you misplaced your password. And also the measurement of unit will be confusing. So bitcoin is best calculating on internet. And at that time the scamming rate will be very high because the coins is no more secured as the internet as the decentralized system. But will be becoming as a centralized system. So the government too will be very happy to control the physical bitcoin.