"I'd wager it only holds as long as people buy into the illusion."

There is no "illusion" involved in paying one's taxes in the denomination demanded by a government that can detain you and strip you of all money and possessions for non-compliance. It is government's ability to tax, at the point of a bayonet if necessary, that gives its fiat currency value.

When one owes a federal tax obligation they are essentially unemployed, regardless of their status in other currencies or properties, until they can pay the government what it demands. Taxation creates unemployment, so it must also create the means to pay the tax in the denomination it can create at will.

Making enough of it to do so while also satisfying the desire to save of the population should be a no-brainer, but that appears to be too high a bar for politicians. If the government had followed its mandate to create (coin) the currency "for the common welfare" all along we wouldn't have much use for crypto or this conversation.

Beyond that, there is also the 25-30% of our economy in doing business with that government and only being paid in its unit of measure as additional enticement.