In its current form, there's no way any cryptocurrency replaces paypal or credit cards. The major problems: Anonymity, Lack of protection from fraud, susceptibility to loss (lose your wallet, oops.), and user unfriendliness (expecting the average Joe to deal with wallet software and bitcoin addresses is major stretch).
I don't necessarily see all of those things as problems, but let's go through them, shall we.
1) Anonymity: While it is possible for a dedicated person with resources to track crypto transactions (since by it's very nature all transactions are stored in a giant public ledger), the transactions themselves do not identify you. It is in this sense pseudonymous, you know which wallet has bitcoin X in it, since you can follow it's path on the blockchain, but since you cannot identify who a said wallet belongs to without access to information from outside the block chain. As you can create neigh infinite addresses for a personal wallet, and need never give the same one out twice, it's hard to be sure that any given address belongs to any given person. This is not to say that bit coin is untraceable, because it by design is very traceable, it's just that used correctly you can conduct transactions without actually revealing your identity, in much the same way that using cash doesn't necessarily reveal your identity.
2) Fraud protection: On one hand, the fact that bitcoin transactions are irreversible is a good thing, a merchant who accepts bitcoin need never worry about whether they're going to get paid for their services. There is no risk to accept bitcoins because they can never be charged-back, unlike credit cards which can actually result in a chargeback up to 6 months after a sale is complete. As far as someone committing fraudulent transactions using your bitcoins, there is no real protection against that, other than securing your wallet. If someone stole your money clip and spent the cash in it, there's no fraud protection against that either. The lesson to be learned is to better protect your money clip, or in the case of bitcoin, encrypt your wallet.
3) Susceptibility to loss: if you can't be bothered to back up your wallet, then you have no one to blame but yourself. Losing access to your wallet can happen, but with a minimum amount of effort can be prevented. People who fail to do regular back ups of their computers are just tempting fate. And besides, you can lose a real wallet just as easy (arguably easier) than a digital one, so susceptibility to loss is not unique to crypto.
4) user unfriendliness: this is really the only 'problem I really agree with you on, but it's really just a matter of time before the pieces click together.