There may still be a niche in informal transfers: Party A buys coin, sends to party B, B sells coin. Potentially handy for those who are unable to deal with conventional payment processors (Criminals, activist groups under government oppression, those affected by international sanctions, people in obscure countries where Paypal does no operate) or who are just unwilling (Anti-corporate idealists, paranoid activists, people worried about the many paypal stories of those who struggled to get their money out).
As a medium of long-term storage, or even something you could price goods in, it's just too volatile.
That would only work if the state-backed currency was immediately converted to BTC, then back again. And if thats the case there will quickly become markets for arbitrage as the value would float around wildly (imagine only holding BTC for