Bitcoin going mainstream doesn’t mean fiat currencies would be going out of existence. That assumption most individuals seem to have is actually out of place. You wouldn’t imagine any nation loosing that part to its authority and identity to Bitcoin ever.
Again, people do invest in real estates, have it seat there in years for it to appreciate in value and the economy still runs fine. Why should Bitcoin be any different?
Is it because @OP tends to view it for just a currency? What happens to Bitcoin serving as an asset…?
Bitcoin isn’t going to shrink the economy and people will always find means to use Bitcoin in the most beneficial at way.
In my humble opinion, saying that bitcoin will shrink the economy is like looking at the economy from a unidirectional point of view and delimiting the potentials or the scope of the economic sector of the world. What I mean is that the economy is wide and big enough to accept emerging technological innovations and solutions and still maintaining the old models and systems.
I don't see the fiat currency facing out at least not now and not in the near future. The massive adoption of the bitcoin and crypto technology won't stop people from using the fiat because they both have their own benefits and limitations.