Bitcoin has proven to be consistent and reliable over the years with measures made available to secure our assets from malware attacks by providing face verification, 2FA, email verification and the likes.
It has being used as payment means for goods on the long run and that has being an innovative system at the moment but the knowledge and usage of Bitcoin has not fully being diversified making it not fully functional.
Don't think 2FA, email and face verification will help in all kinds of attack, you don't know about clipboard attack, if you don't crosscheck the address before sending, you lose your asset by sending to the wrong address. Using custodial wallet means giving them the right to protect your asset so they request all that to ensure security, while for non custodial wallet, you don't need KYC or any form of verification, just you and your keys.
Bitcoin is well functional, we've seen adoption based on currency value and we've seen more as investment choice depending on individual preference. Fiat can't be replaced traditionally by Bitcoin, both can coexist with Bitcoin as the alternative, government is the strength behind fiat and they won't tolerate such replacement.