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RE: Can digital currencies really replace traditional money?
Well, it's too hard to predict these things...
#my2Cents Problem regarding Crypto-Currencies (CC) growth is bad infrastructure. The more things are developed to either accept CC or make usage easier/more understandable the more people will use it.
Imagine if Amazon will accept CC from tomorrow. This one thing will probably give huge growth to CC market.
Problem you described here is quite valid, but if look at history you will see that there always were these kinds of problems when something new came in (Credit Cards/Paypal/etc.)
Obviously there are some good arguments for and against CC... But in general, still, it's too hard to predict how and where this will end up.