So the average consumer is back to trusting a central authority (PayPal)? Then what’s the point, for the end user, of the blockchain in the first place?

It's just another choice people can make. If it suits them to denominate their transactions and stores of currency in bitcoin they can, if they wish. If they don't trust pay pal there will be countless other payment processors with varying levels of decentralization to suit whatever needs they have. If they don't like bitcoin they can use dollars, euros, doge whatever.

You get to choose between out-sourcing the liability or naked-running. You can even linearly-interpolate between the two extremes. In case of banking, you already payed the hidden fee (banks get bailout using government money, aka your money)

The number of consumers trying to buy a coffee who will “linearly interpolate between the two extremes” will be limited to a vanishingly small group of consumers who enjoy that kind of thing.

The two responses to my very simple question prove to me that crypto is a fad that will fade into the background. Maybe a few big players will use it as their protocol, but the average consumer is never going to think about it.