Cryptocurrency are alternative payments methods, they cannot totally replace fiat system.they might come times where you have to pay with fiat and so we cannot expect cryptocurrency to take out fiat totally. Though in the future, we might see people adopting digital financial system more. Because it's far more easier and one can have control of his funds if he wish, compared to fiat Which are generally controlled by the government.
It is true. Cryptocurrency isn't intended to remove fiats or paper money. Cryptocurrency is just digital money, it is the additional currency. The function of Cryptocurrency is to complete paper money, it won't remove paper money or fiats. We can't deny that we need paper money or fiats, physical money is always needed. There are many places in the world that still can't apply the digital money for their transactions.
Digital financial system has been adopted. Nowadays, we have some options for paying goods or services. We can pay with physical money or transfer money through our digital bank account. This is also an example of digital financial system. However, with cryptocurrency, the digital financial system will be improved more.