You totally missed my point.
It's not that fiat currencies are traded. It's the fact that they're a universally accepted medium of exchange. Especially global currencies like the U.S. dollar, the Euro, and the Yen. You can walk into pretty much any store in any country with U.S. currency and they'll accept it. Try that with any crypto currency, 99% of the time they'll look at you funny and possibly kick you out if you can't pay.
As for crypto being a "digital gold" there's a big difference between gold and crypto. You can make things with gold. A lot of things. Fact is virtually every electronic device has some gold in it. So while the perceived value of gold does create a speculative market, there's a base worth that gold simply can't fall below. The same can't be said for crypto. Crypto currencies have the same worth as any other digital good. It's no different than the space ships you can pledge for in Star Citizen.
The fact is any currency is a place holder for actual goods and services. In other words a medium of exchange that simplifies transactions between people. Having a national currency means that a country's citizens aren't forced to resort to bartering to extract value from their labour. It's strength comes from the fact that it's universally accept by all citizens as a medium of exchange. Truth is that as long as everyone agrees on it's role government backing isn't totally necessary. It's simply there to assure everyone that the currency will remain solvent.
Crypto's biggest downfall is the fact that it's not a universal medium of exchange for the vast majority of people and countries. Any fiat currency can be given value by what you can purchase with it. Say bread. Virtually every country has bread, and each country's bread can be assigned a local currency value. Of course this will vary depending on market forces and the country's economic health. A loaf that costs $3.60CN might only cost $2.10US, but the bread still has intrinsic value in of itself, and the ability to exchange fiat currency for it is what gives the currency value.
You really can't do that with crypto currency except in some edge cases. It derives all it's worth from investor demand, not what you can purchase with it. That's the very definition of a speculative market. Even the highly speculative stock markets are based on the worth of the company's issuing the stock and how well they've performed over a given period of time. Not so crypto. Hell, even the tulips in the often referenced tulip craze had intrinsic value.
With digital goods there's nothing tangible, and that's their biggest weakness. But it's not so important when you're talking about digital ships because even though they're not real they'll have entertainment value... eventually... maybe. (don't let me down Chris). But crypto currency doesn't even have that going for it. It's a technologically backed smoke and mirrors that could eventually, possibly, lead to something more tangible. Or it could remain a purely speculative endeavor that is really more like high stakes poker than anything else.
I know for a fact most places in my country will only take their dollar.
You can't just go anywhere and expect to use the USD, it's not that all high and mighty.
In fact, there are more places in my country right now that accept bitcoin and not USD.
Just because you can make something out of it does not make it have value. Anything can be made from anything, does not make it have value. It's the fact gold is worth so much is what makes it worth it's value.
"A loaf that costs $3.60CN might only cost $2.10US, but the bread still has intrinsic value in of itself, and the ability to exchange fiat currency for it is what gives the currency value."
Or I can give 0.000069BTC at this current time. Prices change all the time, even currencies worth (Check out the purchasing power for any FIAT currency. You always lose value every year.)
What you are saying is Bitcoin has no value because it's numbers on a screen? Hello, what do you think is in your bank account. It is not actually backed by physical money. (10% at most maybe) 90% is literally debt.
Your currency is only backed by debt. HYPER INFLATION HERE WE COME.
Then come the pretenders that go, "mY CuRrEnCy Is BaCkEd By Us GoV aNd It"s MiLiTaRy" Ok, if it's so good, why does the value of it keep going down? Not only that, look at Russia, 2nd biggest military, goes to war and their currency comes straight down (it's back up now because Putin actually made a great call on his currency to back it up with gold). That doesn't show a lot of confidence with the state of politics in the US right now.
People who say they don't invest in Crypto because of the volatility have not been paying attention. Most things are volatile. Show me one thing that hasn't crashed. Everything at some point has crashed.