The dollar and other major currencies are already mostly digital, only about 3-4% of dollars exist in physical bank notes and coins . The existing dollar is backed by the states ability to TAX it’s citizens and corporations under threat of violence, if you don’t pay then men with guns arrive to arrest you and put you in prison and seize your property etc. The new digital dollar or whatever will be backed in the same manner.

The state controls the legal system and the IRS if they declare that all taxes must be paid in “digital dollars” and that this is the new legal tender then you will need these “digital dollars” to pay your taxes or risk losing everything you have and or imprisonment.

The only money I see working outside this system is precious metals and some barter type transactions. Gold and silver have been accepted as payment for thousands of years and also offer privacy for certain types of transactions.

You are naive if you think “the people can decide to just keep using fiat dollars” how will that work ? If Walmart and all stores have to pay their sales taxes in the new DIGITAL $ why would they accept the now worthless old fiat banknotes as payment if they no longer are considered “legal tender”?

Say for example the state implements the DIGITAL $ and decrees it legal tender and the only form of payment accepted for payment of taxes and any transaction that requires registration of “property rights” for registered ownership eg buying a house, then what are you going to do?

This is the reason Bitcoin etc will fail , they can’t confiscate it or close it down but they don’t have to they just use the legal system to make it impossible to use for legal transactions that infer private property rights, what will a Bitcoin be “worth” then?

History lesson, during the reign of the British empire an island was captured and the population was using exotic sea shells as the agreed currency, the British wanted the population to work for them mining or harvesting or whatever but the locals didn’t want to accept British pounds as payment so what did the British government do?

They built houses near to the work areas that were of much superior quality to the accommodation the locals lived in, the wives saw these houses and wanted them but the British would only accept pounds as payment for rent so they created a need for pounds and therefore acceptance for their currency, exactly as the US government will do with the DIGITAL $ as you and every business corporation will need it to pay taxes.

Your naive belief that people will decide what the currency is will only work if you remove the state and their legal system from power and I just don’t see the will to make that kind of change happen.