Traditional currency is backed by the requirement that it be used in transactions conducted with the issuing government, and also by the requirement that it be accepted as a method of payment for all debts under the jurisdiction of that government.

That does not change anything in practice, just ask Venezuela how that goes for them. If people don't believe in your currency it's game over. The only backing traditional currency has is that people believe in them.

The problem with Venezuela is definitely not that people stopped believing in the currency. That's a consequence, not the cause. It's not like people are going to wake up some day and stop believing in the dollar. If the economy of the USA was to collapse however, then that would be a problem.