Not really. You could have said that in 1929, and 2008, as well. The Mt. Gox exchange "died" (equivalent to a bank failure) not the whole bitcoin economy.

It's not really much different than regular money. You go to work, or sell a crop,  and they write a check, or direct deposit your money into your bank, then you write a check or use your credit or debit card. You seldom actually come in contact with physical dollars, these days, as a general rule.

The nice thing about bitcoin is you can store them digitally, off line, in what's called "cold storage". You cannot do that with dollars. Your only option is keeping it in the bank, investments or hard cash, which is hard to store in large quantities.