>This is exactly the one use case where cryptocurrencies do work, ... Doing non-centralized transactions is what it excels at.
Isn't it backwards? If I have a few (officially issued) colored pieces of paper in my pocket, I can give them away in exchange for other stuff, but if I have a cryptocoin in my pocket, there is no way I can exchange it for anything unless another party (or a majority) agrees to that exchange.
You're begging the question.* Both cases rely on the network effects of the currency. I am not convinced that a government-backed piece of paper will still have value when "the current financial system stopped working." That financial system is part and parcel of the government.
Isn't it backwards? If I have a few (officially issued) colored pieces of paper in my pocket, I can give them away in exchange for other stuff, but if I have a cryptocoin in my pocket, there is no way I can exchange it for anything unless another party (or a majority) agrees to that exchange.