If governments of different countries everywhere begin to introduce their own cryptocurrencies, rather than using Bitcoin, then it will be tested for strength. Will digital gold be able to compete, for example, with the national currency of China or the real digital dollar?
Digital centralized State issued coins don't behave much different than digital fiat. Think of using your debit card all the time (as we do here) and you get it. The so called "cashless" societies.
There is no reason to believe these are going to be any better than the fiats they are replacing (complement?). It only has the advantages of digital money, but none of cryptocurreny, except maybe the difficulty to counterfeit it (if they use a blockchain with plenty of node distribution, code audit, etc).
In short there is nothing Bitcoin needs to fear, by design those centralized coins are flawed, and are backed by "trust" in people, not code. If anything, without proper community code audit, they are much much weaker, exactly like closed proprietary software is vs Free and Open Source.
it all centers in where are you putting your trust: People or code. People are unreliable, they have the power to destroy you, and you are "trusting" them not to abuse that power. Sounds nice and dandy when you see exemplary countries like the US or EU, what with their so nice managed fiat currencies, but you fail to notice that those coins can be made worthless overnight the same it happened to Zimbabwe and Venezuela, over "some executive decision" (typically the budget fell short to maintain proper corruption levels, they order printing).
My country issued one of those, and they recently "increased" the amount of "oil barrels" backing it. How many coins are there? You can't tell. Has anyone actually been given an actual oil barrel in exchange? Its not possible. This isn't that different from buying bonds, all you get is a flimsy pledge that can become null overnight (say, after a government change).
Or someone selling paper "equivalent" to Tulips. Nope, its not the actual tulip you are buying, just a "paper" that "says" somebody would be willing to exchange it for the actual thing, when in fact, you can't (and no one can't ever correlate the amount of papers to the amount of Tulips, until its too late and obvious). I have zero trust to coins "backed" on anything, especially other coins (pegging). You say nothing backs up Bitcoin? Yes, its backed in trust, to its code, that can't be changed so easily. The same can't be said about State issued fiat currency, it can be changed without warning overnight, and usually over the weekend...
The only way a State government can get any credibility, is when they adopt Bitcoin itself. To that, Japan has the most merit, since you can pay and be paid legally in bitcoin over there. Now the harder part is convincing the employers to do it, but at least the gov is out of the way. Employers do have a hidden advantage in using fiat. See, as all fiats lose value over time, if the employer keeps the wage the same, it means every year he/she is effectively reducing the pay (opposite to whatever the fiat has lost in value, typically at least 2%).
When you use Bitcoin, you are escaping this. Switching to deflationary currency, cannot be understated. And to understand how deflationary economies work, you have to study the
Austrian school of economy, the Chicago school is useless (and opposed) to deflation, but it currently dominates the world...
Because none of those fools studied the Austrians, they fear deflation the most, and their bankers friends would have their revenue seriously reduced in a post Chicago world. As with technology, sometimes a change comes that make a long time profitable business obsolete. Banks don't need to disappear, but they won't be as useful anymore, so they are bound to shrink or diversify their source of revenue (Ie. become exchange or lending platform operating under full reserve rules).
