The traditional fiat system "works" only by tacit agreement (between a cadre of connected top entities in major governments). At ANY time when a majority of these connected entities decide, agreements can suddenly change and once-solid country currencies become instantly worthless.
Bitcoin/the blockchain just offers a more sophusticated alternative, but is still too new to immediately replace the old system. But in time, it will.
What you say about fiat is a misunderstand of the system. Does a merchant in Australia pay a soybean dealer in Brazil in USD because of the US government? Not at all.
Thinking that government has anything to do with the USD is why most fail to understand what is taking place and are wrong for decades. Have you ever heard of fractional reserve banking?
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What I DO know is if the US dollar ceases to remain the global reserve currency and some other becomes the default that everything else is based on, the dollar will "go to Hell"...
And take the prestige of the US with it.
So, from MY point of view, it is BEST to financially diversify as much as one is able.