So… there's that.
The government issues USD, it doesn't back it.
The government implicitly guarantees that the USD can be used to purchase goods and services. Take a dollar bill. It has "For all debts, public and private". This is a guarantee by the government. If the USD gets outcompeted in the US, then that would make the government a liar, and thus it would use its power to make that not happen.
The government guarantees the value of fiat USD. The government has congress, police, military and nuclear weapons to back that guarantee.
Not only is it a "promise" by the government. It's also in its best interest to maintain control of monetary policy.
And also the people want it, so…
That's not backing, there's nothing that the government guarantees I am able to exchange for $1.
> Take a dollar bill. It has "For all debts, public and private".
That has a long list of exceptions. But regardless, that's not backing.
> The government guarantees the value of fiat USD.
No it doesn't, the value of USD fluctuates every minute, and goes down significantly over time.
Once upon a time you could take your dollars to the government and exchange it for a fixed amount of gold. That was backing.
(serious honest question)
The US government DOES guarantee that the USD has value. It's not something that they cannot fail at, but they do guarantee it. Cryptocurrency has no guarantee at all that it has value.
If your definition of "backing" is that you are guaranteed to be able to exchange it for something else, then cryptocurrency is truly backed by nothing, making the statement "backed by math" commonly used by bitcoin nerds complete nonsense.
And if laws are not obeyed that's a police matter.
Concretely if stores stop taking fiat, and only cryptocurrency, to the point where it affects the economy, then you should expect laws preventing that. If that doesn't help then you should expect to see arrests happening.
Governments have the legal and physical ability to enforce monetary policy. Bitcoin nuts who say that "fiat currency is backed by nothing" are delusional. Several currencies are ultimately backed by nuclear weapons.
So in other words cryptocurrencies are only allowed to the extent that they don't overthrow the whole system. And overthrowing the whole system was the whole point, right? (well, that and buy heroin and make ransomware)
Like any technology, it works or it doesn't, and people will use the one that works the best for them if they have a choice. For instance people in some countries use their local currency for daily purchases, but store their wealth in instruments that are valued in dollars, euro's, etc. Some people will break the laws of their own countries to lay their hands on those dollars or euro's.
Money is speculative inasmuch as its value is still relative to other things such as stocks, gold, and bitcoins. Holding dollars instead of gold on any given day is a speculation. In a relatively free economy, there's no such thing as opting out of speculation.
Bitcoins are unique inasmuch as they are designed to exist without any deliberate purpose being imposed on them. The only way a government can manipulate the value of bitcoins, that I can think of, is to subsidize the electricity for bitcoin mining.