You may have a different experience, but most people tend to only keep small amounts of cash that they're able to accept the loss of around. They put the rest of their assets in banks and securities because then they're protected from loss by several mechanisms like bank security, legal security, and insurance.

The way people handle money is literally the opposite of keeping your identity on a blockchain.

I'm actually not sure this is true. I lived in the US 2014-early 2021 and don't think I used cash after about 2017; I've lived in Europe since and just got touched cash for the first time today because my Christmas tree delivery guy doesn't take Revolut. A few months ago I had lunch at a restaurant whose terminal went down and I asked what they wanted me to do and they said "sure, don't worry about it, come back later today and pay, or whenever you can" (so I did, obviously.)

No doubt there are people for whom cash has valuable properties, but I'm just saying I don't think I'm one of them and my use case seems pretty normal as far as people go.