The future of crypto currencies is unknown, but it is a new generation of Money which is already replacing the paper currency, especially Bitcoin been the most popular and successful among other crypto currencies so far
From my knowledge there is no day bitcoin is replacing paper money and it's not created to replace paper (fiat) neither was it created to compete with fiat. Bitcoin is created to be a
supporter to fiat where fiat payment can't scale through bitcoin will solve the problem, for instance you can be at your home to transacts some billions of dollars through Bitcoin without have to go queue in bank where they would start asking some silly questions about huge amount you are sending out to people, also in bank there are always some certain amount you can send per day or months but with bitcoin you won't experience those barriers.
You are right, and Bitcoin has not and most likely will not be able to replace fiat or fiat currency and this will not happen due to its volatility. Bitcoin is just an alternative that perfects the shortcomings of banks and fiat as you said especially in terms of security and transparency, and Bitcoin and fiat will coexist and will not eliminate each other.
And I think the future of Bitcoin is very bright in terms of profits if we implement the DCA strategy as early as possible and stick with it for the long term. However, to be able to replace fiat completely, in my opinion it is impossible but both can be an option for transactions.